Form 424B5 OncoCyte Corp

 

Filed Pursuant to Rule 424(b)(5)

Registration No. 333-231980

 

 

PROSPECTUS SUPPLEMENT

(To Prospectus dated June 18, 2019)

 

5,058,824 Shares

 

 

Common Stock

  

We are offering up to 5,058,824 shares of our common stock directly to certain institutional investors pursuant to this prospectus supplement and the accompanying prospectus. Each share of our common stock is being sold at a purchase price of $1.70 per share.

 

Our common stock is listed on the NYSE American under the symbol “OCX.” The last reported sale price of our common stock on November 12, 2019 was $1.70 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-4 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.

 

		Per Share				Total
Public offering price		$	1.70			$	8,600,000
Proceeds, before expenses, to us		$	1.70			$	8,600,000

 

Delivery of the shares of our common stock is expected to be made on or about November 15, 2019 through the book-entry facilities of the Depository Trust Company.

 

Prospectus Supplement dated November 13, 2019

 

 

TABLE OF CONTENTS

 

Prospectus Supplement

 

ABOUT THIS PROSPECTUS SUPPLEMENT	S-1
PROSPECTUS SUPPLEMENT SUMMARY	S-2
THE OFFERING	S-3
RISK FACTORS	S-4
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	S-6
USE OF PROCEEDS	S-7
DIVIDEND POLICY	S-7
DILUTION	S-7
DESCRIPTION OF OUR COMMON STOCK	S-8
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS	S-9
LEGAL MATTERS	S-12
EXPERTS	S-12
WHERE YOU CAN FIND ADDITIONAL INFORMATION	S-12
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE	S-12

 

Prospectus

 

ABOUT THIS PROSPECTUS	1
SUMMARY	2
RISK FACTORS	3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	3
USE OF PROCEEDS	3
DIVIDEND POLICY	3
SECURITIES THAT MAY BE OFFERED	4
DESCRIPTION OF CAPITAL STOCK	4
DESCRIPTION OF WARRANTS	5
DESCRIPTION OF UNITS	7
SELLING SHAREHOLDERS	8
PLAN OF DISTRIBUTION FOR THE COMPANY	12
PLAN OF DISTRIBUTION FOR THE SELLING SHAREHOLDERS	14
LEGAL MATTERS	15
EXPERTS	15
INFORMATION INCORPORATED BY REFERENCE	15
WHERE YOU CAN FIND MORE INFORMATION	16

 

 

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-12 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 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-4 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

 

We are a molecular diagnostics company whose mission is to provide actionable answers at critical decision points across the lung cancer care continuum, with the goal of improving patient outcomes by accelerating and optimizing diagnosis and treatment. We plan to commercialize a proprietary treatment stratification test that identifies patients with early stage non-small cell lung cancer that may benefit from chemotherapy, resulting in a significant improvement in survival rates. We are also developing a proprietary immune-signature based non-invasive blood test to rule-out malignancy in patients with lung nodules detected on imaging, with the goal of reducing the number of unnecessary invasive and expensive diagnostic procedures.

 

In September 2019, we acquired a 25% equity interest in Razor Genomics, Inc. (“Razor”), a privately held company, developing a prognostic test to assist physicians in the management of non-small cell lung cancer. Razor’s key product is a commercially available test called the “Molecular Prognostic Assay” (the “Razor assay”) for early stage lung cancer. We have licensed all rights to commercialize the Razor assay and plan to conduct certain clinical trials for purposes of promoting commercialization.

 

We are currently devoting substantially all of our efforts on developing and commercializing our lung cancer diagnostic test DetermaVu™ and the Razor assay.

 

DetermaVu™ utilizes proprietary sets of gene expression markers to help confirm whether suspicious lung nodules detected through Low Dose Computed Tomography, or LDCT, scans, x-rays or other imaging are likely to be benign or malignant.

 

Molecular diagnostics such as DetermaVu™ are assays that identify a disease by studying molecules such as proteins, deoxyribonucleic acid, or DNA, and ribonucleic acid, or RNA, in a tissue or fluid. DetermaVu™ is based on our proprietary Immune System Interrogation approach that examines the body’s immune system response to a specific disease by measuring differential RNA expression in patients with the disease versus patients without the disease. In the future, we may study whether our technology and Immune System Interrogation approach could have applications in other types of cancer or other diseases.

 

Recent Developments

 

Preliminary Financial Information

 

As of September 30, 2019, we had cash and cash equivalents of $19.4 million. Our total operating expenses for the quarter ended September 30, 2019 were $5.3 million.

 

The preliminary unaudited financial information discussed above consist of estimates derived from our internal books and records and have been prepared by, and are the responsibility of, management. Neither OUM & Co. LLP nor any other independent auditor has audited, reviewed, compiled or performed any procedures with respect to the accompanying preliminary unaudited financial information. Accordingly, neither OUM & Co. LLP nor any other independent auditor expresses an opinion or any other form of assurance with respect thereto.

 

The preliminary estimates discussed above are subject to the completion of financial closing procedures, final adjustments and other developments which may arise between now and the time the financial results for our first quarter are finalized. Therefore, actual results may differ materially from these estimates, and all of the preliminary estimates are subject to change. In addition, preliminary unaudited financial information for our quarter ended September 30, 2019 are not necessarily indicative of operating results for any future period. Further, the preliminary unaudited financial information for the quarter ended September 30, 2019 have been prepared by our management based only upon information available to it as of the date hereof and have not been prepared with a view toward compliance with published guidelines of the American Institute of Certified Public Accountants for the preparation or presentation of financial information.

 

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		5,058,824 shares
Offering price of common stock		$1.70
Common stock to be outstanding immediately after this offering(1)		57,031,654 shares
Use of proceeds		We expect to receive net proceeds from this offering of approximately $8.5 million, after deducting the estimated expenses of this offering payable by us. We currently intend to use the net proceeds from this offering to support the Razor assay and DetermaVu™ development and 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.”
Risk factors		Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page S-4 of this prospectus supplement and page 3 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.
NYSE American symbol for our common stock		OCX

 

 

(1) The number of shares of our common stock to be outstanding immediately after this offering as shown above is based on 51,972,830 shares of our common stock outstanding as of June 30, 2019, and excludes:

 

	●	4,035,339 shares of our common stock issuable upon exercise of warrants outstanding as of June 30, 2019, with exercise prices ranging from $3.00 to $5.50 per share;
	●	3,295,000 shares of our common stock issuable upon exercise of options outstanding under our 2010 Stock Option Plan as of June 30, 2019, with a weighted-average exercise price of $3.10 per share;
	●	2,128,000 shares of our common stock issuable upon exercise of options outstanding under our 2018 Equity Incentive Plan as of June 30, 2019, with a weighted-average exercise price of $3.48 per share;
	●	20,000 restricted stock units issued to our executive officers under our 2018 Equity Incentive Plan; and
	●	2,832,000 shares of our common stock available for future grants under our 2018 Equity Incentive Plan as of June 30, 2019.

 

Broadwood Partners, L.P., which beneficially owns 22.9% of our common stock (pursuant to its Schedule 13D/A, as filed on September 13, 2019),has agreed to purchase 1,176,471 shares of our common stock in this offering.

 

 

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 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.

 

Certain of our current shareholders are also entitled to registration rights that, subject to certain restrictions, 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 $1.70 per share in this offering, if you purchase securities in this offering, you will suffer immediate and substantial dilution of approximately $0.96 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.

 

Risks Related to Our Business

 

We may incur significant cash payment and common stock issuance obligations under our agreements arising from our investment in Razor.

 

We have entered into certain agreements with Razor and its shareholders, including a Purchase Agreement, Minority Holder Stock Purchase Agreements, and a Development Agreement, under which we may incur significant cash payment and common stock issuance obligations. Under the Purchase Agreement and the Minority Holder Stock Purchase Agreements we could become obligated to purchase, or we may elect to purchase, the outstanding Razor common stock from its shareholders for which we would pay those shareholders $10 million in cash and issue to them shares of OncoCyte common stock with an aggregate market value equal to $5 million at the date of issue.

 

 

Under the Development Agreement, upon completion of enrollment of the full number of patients for the Razor assay Clinical Trial, OncoCyte will be obligated to issue to the Razor shareholders shares of OncoCyte common stock with an aggregate market value equal to $3 million at the date of issue.

 

The number of shares of OnocCyte common stock issuable under both the Purchase Agreement and the Development Agreement on a combined basis is limited to 19.99% of the issued and outstanding shares of OncoCyte common stock or the outstanding voting power of OncoCyte shares as of the date of the Purchase Agreement, and if that number of shares has a value of less than $5 million on the date the Purchase Agreement obligation must be met, or less than $3 million in on the date the Development Agreement obligation must be met, we would need to pay an amount of cash necessary to bring the combined value of cash and shares to $5 million to satisfy the Purchase Agreement obligation, or $3 million to satisfy the Development Agreement obligation. The number of shares that may become issuable to satisfy those $5 million and $3 million obligations cannot presently be determined because the number of shares will depend upon the market price of our common stock when the shares become issuable. The issuance of those shares of common stock will dilute the interests of our other common stock holders.

 

Under the Development Agreement we are also obligated to pay the expenses of the Razor assay Clinical Trial after Razor’s $4 million Clinical Trial Expense Reserve has been exhausted. We currently estimate that we may be obligated to pay up to $12 million over a period of years for our portion of the Clinical Trial expenses. If within a specified time frame Encore is substantially responsible for obtaining funding to OncoCyte or Razor for the Clinical Trial from any third-party pharmaceutical company, a portion of such additional funding amount will be paid to Encore, subject to a $3 million cap on the payment to Encore if the funding is provided by a designated pharmaceutical company.

 

Also under the Development Agreement we must pay Encore $4 million in cash if Razor receives a final positive coverage decision from CMS/MolDx for reimbursement of patient costs of the Razor assay.

 

To meet these various cash payment obligations, we may need to sell additional shares of our common stock or other securities to raise the cash needed, or we may have to divert cash on hand that we would otherwise use for other business and operational purposes which could cause us to delay or reduce activities in the development and commercialization of our cancer tests. Any shares of common stock or other securities we sell to raise cash to meet our cash payment obligations will dilute the interests of our common stock holders.

 

Our clinical trial and commercialization efforts and other operations related to the Razor assay will be subject to most of the risks described in our most recent Form 10-K.

 

Our Form 10-K for the year ended December 31, 2018, as amended (the “2018 Form 10-K”) discloses certain risks to which our financial condition, results of operations, and future growth prospects are subject. Except for certain risks pertaining specifically to our progress in the development of DetermaVu™, most of the risks described in the 2018 Form 10-K will apply as well to our clinical trial and commercialization efforts and other operations pertaining to the Razor assay, including but not limited to: risks affecting the development and commercialization of new clinical laboratory tests; clinical trial risks; patent, trade secret, and other intellectual property matters; CLIA laboratory, FDA, and other healthcare and patient privacy legal compliance and regulatory matters; and obtaining reimbursement from Medicare and other third party payers. We urge you to refer to the risk factors discussed in Item 1A “Risk Factors” in our 2018 Form 10-K.

 

 

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 $8.5 million, after deducting the estimated expenses of this offering payable by us (estimated to be $75,000).

 

We currently intend to use the net proceeds from this offering to support the Razor assay and 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 may also use a portion of the net proceeds to invest in or acquire businesses or technologies that we believe are complementary to our own, although we have no binding agreements with respect to any acquisitions as of the date of this prospectus.

 

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 June 30, 2019 was approximately $33.5 million, or $0.65 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 June 30, 2019.

 

After giving effect to the issuance and sale of 5,058,824 shares of common stock in this offering at the public offering price of $1.70 per share, after deducting the estimated offering expenses payable by us, the as adjusted net tangible book value as of June 30, 2019 would have been approximately $42.0 million, or $0.74 per share. This represents an immediate increase in net tangible book value of approximately $0.09 per share to our existing shareholders and an immediate dilution in as-adjusted net tangible book value of approximately $0.96 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:

 

Public offering price per share						$	1.70
Net tangible book value per share as of June 30, 2019		$	0.65
Increase in net tangible book value per share attributable to this offering			0.09
As adjusted net tangible book value per share as at June 30, 2019, after giving effect to this offering							0.74
Dilution per share to new investors participating in this offering						$	0.96

 

 

The above discussion and table are based 51,972,830 shares of our common stock outstanding as of June 30, 2019, and excludes:

 

	●	4,035,339 shares of our common stock issuable upon exercise of warrants outstanding as of June 30, 2019, with exercise prices ranging from $3.00 to $5.50 per share;
	●	3,295,000 shares of our common stock issuable upon exercise of options outstanding under our 2010 Stock Option Plan as of June 30, 2019, with a weighted-average exercise price of $3.10 per share;
	●	2,128,000 shares of our common stock issuable upon exercise of options outstanding under our 2018 Equity Incentive Plan as of June 30, 2019, with a weighted-average exercise price of $3.48 per share;
	●	20,000 restricted stock units issued to our executive officers under our 2018 Equity Incentive Plan; and
	●	2,832,000 shares of our common stock available for future grants under our 2018 Equity Incentive Plan as of June 30, 2019.

 

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 OUR COMMON STOCK

 

The 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.

 

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 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 tax consequences of the purchase, ownership and disposition of our common stock. Tax reforms in the United States may result in significant changes in the rules governing U.S. federal income taxation. Such changes may affect the U.S. federal tax consequences of the purchase, ownership and disposition of the common stock discussed herein.

 

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:

 

	●	U.S. expatriates and former citizens or long-term residents of the United States;
	●	persons subject to the alternative minimum tax;
	●	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;
	●	banks, insurance companies, and other financial institutions;
	●	brokers, dealers or traders in securities;
	●	“controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;
	●	partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);
	●	tax-exempt organizations or governmental organizations;
	●	persons deemed to sell our common stock under the constructive sale provisions of the Code;
	●	persons who hold or receive our common stock pursuant to the exercise of any employee stock option or otherwise as compensation;
	●	tax-qualified retirement plans; and
	●	“qualified foreign pension funds” as defined in Section 897(l)(2) of the Code and entities all of the interests of which are held by qualified foreign pension funds.

 

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 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:

 

	●	an individual who is a citizen or resident of the United States;
	●	a corporation created or organized under the laws of the United States, any state thereof, or the District of Columbia;
	●	an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
	●	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:

 

	●	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);
	●	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
	●	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 believe we currently are not, 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, or gross proceeds from the sale or other disposition of, 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.

 

Under the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends on our common stock, and to payments of gross proceeds from the sale or other disposition of such stock.

 

Prospective investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in our common stock.

 

 

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.

 

EXPERTS

 

The balance sheets of OncoCyte Corporation as of December 31, 2018 and 2017, 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, 2018, 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):

 

	●	Our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on April 1, 2019, as amended by Form 10-K/A, filed with the SEC on April 30, 2019;
	●	Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019 and June 30, 2019 filed with the SEC on May 14, 2019 and August 14, 2019, respectively;
	●	Our Current Reports on Form 8-K filed with the SEC on January 28, 2019, January 29, 2019, February 12, 2019, March 20, 2019, April 30, 2019, June 6, 2019, July 8, 2019, July 23, 2019, August 15, 2019, September 5, 2019, October 3, 2019, and October 21, 2019; and
	●	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.

 

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

 

 

$100,000,000

Common Stock

Preferred Stock

Warrants

Units

 

 

25,539,309 Shares

Common Stock

Offered by the Selling Shareholders

 

We may, from time to time in one or more offerings, offer and sell up to $100.0 million in the aggregate of common stock, preferred stock, warrants, units or any combination of the foregoing, either individually or as a combination of one or more of these 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. We may sell these securities directly to investors, through agents designated from time to time or to or through underwriters or dealers. See the section of this prospectus entitled “Plan of Distribution for the Company” for additional information. 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.

 

This prospectus also covers the offer and resale by the selling shareholders identified in the section of this prospectus entitled “Selling Shareholders,” or the Selling Shareholders, of up to an aggregate of 25,539,309 shares of our common stock, or the Resale Shares, consisting of (i) 22,775,656 shares of our common stock held by the Selling Shareholders, and (ii) 2,763,653 shares of our common stock issuable upon the exercise of outstanding warrants held by the Selling Shareholders, or the Warrants. We will not receive any of the proceeds from the sale of the Resale Shares being offered by the Selling Shareholders, although we may receive proceeds from cash exercises of the Warrants. The Selling Shareholders are responsible for all discounts, selling commissions and other costs related to their offer and sale of the Resale Shares. If required, the number of Resale Shares to be sold, the public offering price of those Resale Shares, the names of any broker-dealers and any applicable commission or discount will be included in a supplement to this prospectus. The Selling Shareholders and any participating broker-dealers may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, or the Securities Act, in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the Resale Shares purchased by them may be deemed to be underwriting compensation under the Securities Act.

 

Please read carefully this prospectus, all applicable prospectus supplements, any related free writing prospectuses, and the documents incorporated by reference herein and therein 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 traded on the NYSE American LLC, or the NYSE American, under the symbol “OCX”. On May 30, 2019, the last reported sales price of our common stock on the NYSE American was $4.07 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 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 3 of this prospectus, and under similar headings in the documents incorporated by reference into this prospectus or any applicable prospectus supplement or any related free writing prospectus for a discussion of the factors we urge you to consider carefully before deciding to purchase our securities.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

The date of this prospectus is June 18, 2019

 

 

TABLE OF CONTENTS

 

ABOUT THIS PROSPECTUS	1
SUMMARY	2
RISK FACTORS	3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	3
USE OF PROCEEDS	3
DIVIDEND POLICY	3
SECURITIES THAT MAY BE OFFERED	4
DESCRIPTION OF CAPITAL STOCK	4
DESCRIPTION OF WARRANTS	5
DESCRIPTION OF UNITS	7
SELLING SHAREHOLDERS	8
PLAN OF DISTRIBUTION FOR THE COMPANY	12
PLAN OF DISTRIBUTION FOR THE SELLING SHAREHOLDERS	14
LEGAL MATTERS	15
EXPERTS	15
INFORMATION INCORPORATED BY REFERENCE	15
WHERE YOU CAN FIND MORE INFORMATION	16

 

 

ABOUT THIS PROSPECTUS

 

This prospectus is part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission, or the SEC, under 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 $100.0 million of any of the securities described in this prospectus. In addition, the Selling Shareholders may, from time to time, sell up to an aggregate of 25,539,309 shares of our common stock consisting of (i) 22,775,656 shares of our common stock held by the Selling Shareholders, and (ii) 2,763,653 shares of our common stock issuable upon exercise of the Warrants held by the Selling Shareholders, in one or more transactions as described in this prospectus.

 

This prospectus provides a general description of the securities we or the Selling Shareholders may offer. Each time we or the Selling Shareholders offer and sell securities under this prospectus, we or the selling shareholders will 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 with respect to that offering. 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 should 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. Neither we nor the Selling Shareholders have authorized anyone to provide you with different or additional information. This prospectus is neither an offer to sell nor a solicitation of an offer to buy any securities other than those registered by this prospectus, nor is it an offer to sell or a solicitation of an offer to buy securities where an offer or solicitation would be unlawful.

 

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. See “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 incorporated by reference into this prospectus were made solely for the benefit of the parties to such agreement, including for the purpose of allocating risks among such parties, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants do not purport to be accurate as of any date other than 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 selected information contained elsewhere in this prospectus. This summary is not complete and does not contain all the information you should consider before investing in our securities pursuant to this prospectus. Before making an investment decision, please carefully read this entire prospectus and the documents incorporated by reference into this prospectus, including 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 by better meeting the needs of patients, physicians and payers. Our current focus is developing DetermaVu™, a non-invasive molecular lung cancer confirmatory diagnostic that can be administered to patients as a blood test. DetermaVu™ utilizes proprietary sets of gene expression markers to help confirm whether suspicious lung nodules detected through Low Dose Computed Tomography, or LDCT, scans, x-rays or other imaging are likely to be benign or malignant.

 

Molecular diagnostics such as DetermaVu™ are assays that identify a disease by studying molecules such as proteins, deoxyribonucleic acid, or DNA, and ribonucleic acid, or RNA, in a tissue or fluid. DetermaVu™ is based on our proprietary Immune System Interrogation approach that examines the body’s immune system response to a specific disease by measuring differential RNA expression in patients with the disease versus patients without the disease. In the future, we may study whether our technology and Immune System Interrogation approach could have applications in other types of cancer or other diseases.

 

In January 2019 we completed an R&D Validation study of DetermaVu™ that demonstrated the accuracy of the DetermaVu™ assay in detecting lung cancer. 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 or “CI” suggests that there is a 95% chance that final test performance will be within the stated range. Notably, we obtained these results without including any clinical factors such as nodule size in our proprietary DetermaVu™ algorithm.

 

In April 2019, we successfully completed an Analytic Validation study and commenced a CLIA Validation study. The Analytic Validation Study involved a series of studies, as specified in guidelines for labs under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, designed to establish the performance characteristics of the ThermoFisher Next Generation Sequencing System used for DetermaVu™. The CLIA Validation study currently underway involves assaying approximately 120 samples previously tested in our R&D Validation study in our CLIA validated lab using the assay system now analytically validated, with the goal of demonstrating that the assay system as being run in our CLIA lab provides the same results as those observed in our R&D Validation study.

 

We have prioritized our efforts on DetermaVu™ and lung cancer because we believe that the early detection of lung cancer is one of the greatest unmet needs in diagnostics. Our scientific approach is to measure the immune system’s response to disease and as such we believe that it may prove promising in other cancers and other disease areas.

 

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 address is www.oncocyte.com. Information contained on, or accessible through, our website, is not, and shall not be deemed to be, incorporated in this prospectus or considered a part thereof.

 

 

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, uncertainties and assumptions described in this prospectus, the applicable prospectus supplement and the documents incorporated by reference herein and therein, including the risks described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2018, as amended by Amendment No. 1 thereto on Form 10-K/A, or the Annual Report, and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019, 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. In connection with any specific offering, we also expect to provide risk factors and other information in the applicable prospectus supplement.

 

If one or more of the adverse events relevant to these risks and uncertainties actually occurs, our business, financial condition, results of operations, cash flows or prospects could be materially adversely affected. 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

 

This prospectus and the documents that are incorporated by reference into this 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, 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, and intellectual property, 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 discussed under the “Risk Factors” sections and elsewhere in our Annual Report and the other periodic reports and other filings that we file from time to time with the SEC. These factors and the other cautionary statements made in this prospectus and the documents incorporated by reference herein should be read as being applicable to all related forward-looking statements whenever they appear in this prospectus. The disclosure in this prospectus, including any forward-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 intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

 

USE OF PROCEEDS

 

Except as described in any prospectus supplement in connection with a specific offering, we intend to use the net proceeds from our sale of the securities offered under this prospectus for working capital and general corporate purposes. The principal purposes for which we intend to use the net proceeds from a specific offering and the approximate amounts intended to be used for each such purpose will be set forth in the prospectus supplement relating to that offering.

 

We will not receive any of the proceeds from the sale of the Resale Shares being offered by the Selling Shareholders, although we may receive proceeds from cash exercises of the Warrants.

 

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. Any future determination to pay cash dividends will be at the discretion of our board of directors and will be dependent upon our financial condition, results of operations, capital requirements, requirements of our then-existing credit agreements and other factors as our board of directors deems relevant.

 

 

SECURITIES THAT MAY BE OFFERED

 

We may offer shares of common stock, shares of preferred stock, warrants, units consisting of a combination of the foregoing securities or any other combination of the foregoing. We may offer up to $100.0 million of securities under this prospectus. The prices and terms of any offering will be determined by market conditions at the time of offering. We may issue preferred stock that is exchangeable for or convertible into common stock or any of the other securities that may be sold under this prospectus. 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.

 

In addition, the Selling Shareholders may sell up to an aggregate of 25,539,309 shares of our common stock, consisting of shares of our common stock held by the Selling Shareholders and shares of our common stock issuable upon exercise of the Warrants.

 

The summaries below provide a general description of the securities we and the Selling Shareholders may offer and are not intended to be complete. The particular terms of any security will be described in the applicable prospectus supplement.

 

DESCRIPTION OF CAPITAL 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 that we and the Selling Shareholders may offer, and the preferred stock that we may offer, under this prospectus. We will describe the particular terms of any class or series of these securities in more detail in the applicable prospectus supplement. The description of our capital stock below is summarized from, and qualified in its entirety by reference to, our articles of incorporation and our bylaws, in each case, as amended and as in effect on the date of this prospectus, each of which has been publicly filed with the SEC. Certain terms of our capital stock described below are also based on the California Corporations Code as in existence on the date of this prospectus, and may be affected by future amendments to such code.

 

General

 

Our articles of incorporation currently authorizes the issuance of up to 85,000,000 shares of common stock, no par value, and up to 5,000,000 shares of preferred stock, no par value.

 

Common Stock

 

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.

 

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 our common stock do not have any preemptive, subscription, or redemption rights. All of the outstanding shares of our common stock are fully paid and non-assessable.

 

Our common stock is listed on the NYSE American under the symbol “OCX.”

 

The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, New York 11219.

 

Preferred Stock

 

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 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. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing a change in our control or other corporate action.

 

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:

 

	●	the distinctive designation and the maximum number of shares in the class or series;
	●	the number of shares we are offering and the purchase price per share;
	●	the liquidation preference, if any;
	●	the terms on which dividends, if any, will be paid;
	●	the voting rights, if any;
	●	the terms and conditions, if any, on which the shares of the class or series shall be convertible into, or ex-changeable for, shares of any other class or series of authorized capital;
	●	the terms on which the shares may be redeemed, if at all;
	●	any listing of the preferred stock on any securities exchange or market;
	●	a discussion of any material or special U.S. federal income tax considerations applicable to the preferred stock; and
	●	any or all other preferences, rights, restrictions, including restrictions on transferability and qualifications of shares of the class or series.

 

DESCRIPTION OF WARRANTS

 

General

 

We may offer warrants for the purchase of shares of common stock, shares of preferred stock or the other securities registered hereby, in one or more series. We may issue the warrants by themselves or together with common stock, preferred stock, other warrants or units, 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:

 

	●	the title of such warrants;
	●	the aggregate number of such warrants;
	●	the price or prices at which such warrants will be issued;
	●	the currency or currencies (including composite currencies) in which the price of such warrants may be payable;
	●	the terms of the securities purchasable upon exercise of such warrants and the procedures and conditions relating to the exercise of such warrants;
	●	the price at which the securities purchasable upon exercise of such warrants may be purchased;
	●	the date on which the right to exercise such warrants will commence and the date on which such right shall expire;
	●	any provisions for adjustment of the number or amount of securities receivable upon exercise of the warrants or the exercise price of the warrants;
	●	if applicable, the minimum or maximum amount of such warrants that may be exercised at any one time;
	●	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;
	●	if applicable, the date on and after which such warrants and the related securities will be separately transferable;
	●	information with respect to book-entry procedures, if any;
	●	the terms of any rights to redeem or call the warrants;
	●	U.S. federal income tax consequences of holding or exercising the warrants, if material; and
	●	any other terms of such warrants, including terms, procedures and limitations relating to the exchange or exercise of such warrants.

 

Each warrant will entitle its holder to purchase the number of securities 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 or preferred stock, holders of the warrants will not have any of the rights of holders of common stock or preferred stock purchasable upon exercise, including 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.

 

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.

 

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, warrants or other units, 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:

 

	●	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;
	●	any provisions of the governing unit agreement that differ from those described below; and
	●	any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units.

 

The provisions described in this section, as well as those described in the sections of this prospectus titled “Description of Capital Stock” and “Description of Warrants” will apply to each unit and to any common stock, preferred stock 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.

 

 

SELLING SHAREHOLDERS

 

This prospectus also relates to the offer and resale by the Selling Shareholders of up to 25,539,309 Resale Shares, consisting of (i) 22,775,656 shares of our common stock held by the Selling Shareholders, and (ii) 2,763,653 shares of our common stock issuable upon exercise of the Warrants. The Selling Shareholders may sell any, all or none of the Resale Shares included in and offered by this prospectus. These securities were purchased in various private transactions as summarized below. The summaries do not purport to be complete and, in the case of agreements summarized below, are qualified by reference to the full text of the respective agreements.

 

BioTime Registration Rights Agreement

 

In November 2015, we effected a 1-for-2 reverse stock split of our common stock, or the Reverse Stock Split. All share numbers reflected below have been adjusted to give effect to the Reverse Stock Split.

 

In August 2011, we entered into a Stock Purchase Agreement, or the 2011 Agreement, with BioTime, Inc., or BioTime, pursuant to which we sold and issued 3,500,000 shares of our common stock to BioTime. In May 2015, we entered into a Stock Subscription Agreement, or the May 2015 Agreement, with BioTime pursuant to which we sold and issued 1,500,000 shares of our common stock to BioTime. In September 2015, we entered into another Stock Subscription Agreement, or the September 2015 Agreement, with BioTime pursuant to which we sold and issued 2,710,857 shares of our common stock to BioTime. We refer to the 2011 Agreement, the May 2015 Agreement and the September 2015 Agreement collectively as the Purchase Agreements. In connection with the Purchase Agreements, we entered into a Registration Rights Agreement, first executed in October 2009 and amended in August 2011, May 2015 and November 2015, with BioTime and certain other parties. Pursuant to the Registration Rights Agreement, we agreed, upon the occurrence of certain events and subject to certain conditions, to file with the SEC a registration statement covering the shares of our common stock sold and issued to these parties pursuant to the Purchase Agreements for resale under the Securities Act, and to use commercially reasonable efforts to keep such registration statement effective until the earlier of (i) the completion of the distribution or distributions being made pursuant to such registration statement, or (ii) such time as these parties are eligible to sell such shares of common stock under Rule 144 under the Securities Act without application of the manner of sale and volume limitations thereunder.

 

We also issued an aggregate of 11,708,094 shares of our common stock to BioTime in private transactions in October 2009, July 2011 and November 2015 and we have agreed to include all outstanding shares of our common stock issued in those transactions in the registration statement of which this prospectus forms a part. In December 2015, BioTime distributed 4,744,707 shares of the 19,418,951 shares of our common stock it then held to its shareholders. The resulting 14,674,244 shares of our common stock held by BioTime constitute the Resale Shares being registered hereby on behalf of BioTime.

 

August 2016 Private Placement

 

In August 2016, we sold an aggregate of 3,246,153 immediately separable units, with each unit consisting of one share of our common stock and one warrant to purchase one share of our common stock, at a price of $3.25 per unit. The warrants have an exercise price of $3.25 per share of common stock, became exercisable in October 2016, and may be exercised until October 2021. We refer to this transaction as the “August 2016 Private Placement.” We agreed to register the resale of the securities contained in the units, subject to certain conditions. All of the Resale Shares being registered hereby on behalf of The Bailey 1995 Family Trust and Seamark Fund, L.P. represent shares of our common stock issuable upon exercise of Warrants contained in the units they purchased in the August 2016 Private Placement. The Resale Shares being registered hereby on behalf of Broadwood Partners L.P., or Broadwood, include 1,538,461 shares of our common stock and 573,461 shares of our common stock issuable upon exercise of Warrants contained in the units Broadwood purchased in the August 2016 Private Placement.

 

February 2017 Warrant Exercise Agreements

 

In February 2017, we entered into warrant exercise agreements with the following Selling Shareholders, pursuant to which each agreed to cash-exercise warrants acquired in the August 2016 Private Placement and we issued to them new Warrants, in each case immediately exercisable and expiring in February 2022, as follows:

 

	●	Broadwood cash-exercised warrants to purchase 425,000 shares of our common stock and we issued to it a new Warrant to purchase 212,500 shares of our common stock at an exercise price of $3.25 per share;
	●	ALB Private Investments LLC, or ALB Investments, cash-exercised warrants to purchase 100,000 shares of our common stock (being the entirety of the warrants it had purchased in the August 2016 Private Placement), and we issued to ALB Investments a new Warrant to purchase 100,000 shares of our common stock at an exercise price of $5.50 per share;

 

 

	●	Phylis Esposito cash-exercised warrants to purchase 50,000 shares of our common stock (being the entirety of the warrants she had purchased in the August 2016 Private Placement), and we issued to Phylis Esposito a new Warrant to purchase 50,000 shares of our common stock at an exercise price of $5.50 per share; and
	●	The Thunen Family Trust cash-exercised warrants to purchase 50,000 shares of our common stock (being the entirety of the warrants it had purchased in the August 2016 Private Placement), and we issued to The Thunen Family Trust a new Warrant to purchase 50,000 shares of our common stock at an exercise price of $5.50 per share.

 

Under the warrant exercise agreement with Broadwood, we agreed to file a registration statement covering the shares issuable upon exercise of the new Warrants, subject to certain conditions. We further agreed to use commercially reasonable efforts to keep such registration statement effective until the earlier of the date that all of shares covered by the registration statement have been sold or can be sold publicly without restriction or limitation under Rule 144, or five years from the date of the warrant exercise agreement. The Resale Shares being registered hereby on behalf of Broadwood include the 212,500 shares of our common stock issuable upon exercise of its new Warrant. We have also agreed to include the shares of our common stock issuable upon exercise of the new Warrants issued to ALB Investments, Phylis Esposito and The Thunen Family Trust in the registration statement of which this prospectus forms a part, which represent all of the Resale Shares being registered hereby on behalf of such holders.

 

July 2017 Warrant Exercise Agreements

 

In July 2017, we entered into additional warrant exercise agreements with the following Selling Shareholders, pursuant to which each agreed to cash-exercise warrants acquired in the August 2016 Private Placement and we issued to them new Warrants, in each case immediately exercisable and expiring in July 2019 or July 2022, as follows:

 

	●	Broadwood cash-exercised warrants to purchase 540,000 shares of our common stock and we issued to it a new Warrant to purchase 270,000 shares of our common stock at an exercise price of $3.25 per share, expiring in July 2022;
	●	Anthony Low-Beer cash-exercised warrants to purchase 150,000 shares of our common stock (being the entirety of the warrants he had purchased in the August 2016 Private Placement), and we issued to Anthony Low-Beer a new Warrant to purchase 150,000 shares of our common stock at an exercise price of $5.50 per share, expiring in July 2022;
	●	Patrick Lin cash-exercised warrants to purchase 76,923 shares of our common stock (being the entirety of the warrants he had purchased in the August 2016 Private Placement), and we issued to Patrick Lin a new Warrant to purchase 76,923 shares of our common stock at an exercise price of $5.50 per share, expiring in July 2022; and
	●	GKarfunkel Family LLC, or GKarfunkel, cash-exercised warrants to purchase 1,000,000 shares acquired in the August 2016 Private Placement (being the entirety of the warrants it had purchased in the August 2016 Private Placement), and we issued to GKarfunkel (i) a new Warrant to purchase 500,000 shares of our common stock at an exercise price of $3.25 per share, and (ii) a new Warrant to purchase 500,000 shares of our common stock at an exercise price of $5.50 per share, in each case expiring in July 2019.

 

Under the warrant exercise agreement with Broadwood, we agreed to file a registration statement covering the shares issuable upon exercise of the new Warrants, subject to certain conditions. We further agreed to use commercially reasonable efforts to keep such registration statement effective until the earlier of the date that all of shares covered by the registration statement have been sold or can be sold publicly without restriction or limitation under Rule 144, or five years from the date of the warrant exercise agreement. The Resale Shares being registered hereby on behalf of Broadwood include the 270,000 shares of our common stock issuable upon exercise of its new Warrant. We have also agreed to include the shares of our common stock issuable upon exercise of the new Warrants issued to Anthony Low-Beer, Patrick Lin and GKarfunkel in the registration statement of which this prospectus forms a part, which represent all of the Resale Shares being registered hereby on behalf of such holders.

 

 

Securities Purchase Agreements

 

In March 2018, we entered into a securities purchase agreement pursuant to which we sold and issued an aggregate of 3,968,254 shares of our common stock to Broadwood in a private placement. Pursuant to the securities purchase agreement, we also agreed to register the resale of the shares of our common stock sold in the private placement, subject to certain conditions. We also agreed to pay liquidated damages if we did not file the registration statement in a timely manner. Because the registration statement was not filed as required by the securities purchase agreement, during 2019 we paid $300,000 to Broadwood. The Resale Shares being registered hereby on behalf of Broadwood include these 3,968,254 shares of our common stock.

 

Material Relationships

 

Prior to February 2017, we were a majority-owned, consolidated subsidiary of BioTime. Since February 2017, the shares of our common stock held by BioTime have accounted for less than 50% of our total common stock outstanding and we ceased being a consolidated subsidiary of BioTime.

 

In October 2009, we entered into a Shared Facilities and Services Agreement, or Shared Facilities Agreement, with BioTime, pursuant to which we have use of laboratory and office space at BioTime’s facility in Alameda, California. In addition, pursuant to the Shared Facilities Agreement, BioTime has provided, and continues to provide, administrative support to us on a reimbursable basis, and we presently rely on the provision of certain management and administrative services, including patent prosecution, certain legal services, accounting, financial management, and controls over financial accounting and reporting, by BioTime. Further, since our inception, we have partly financed our operations from loans borrowed from BioTime, of which no amount was outstanding as of March 31, 2019, and sales of the common shares of BioTime, of which we held 353,264 shares as marketable equity securities as of March 31, 2019. The chairman of our board of directors currently serves as a member of the board of directors of BioTime, and the chairman of the board of directors of BioTime currently serves as a member of our board of directors.

 

Neal Bradsher, who may be deemed a beneficial owner of the Resale Shares directly owned by Broadwood, is a member of the board of directors of BioTime.

 

Don Bailey, who is co-trustee of The Bailey 1995 Family Trust, served as a member of our board of directors from August 2016 until November 2017, and currently serves on the board of directors of BioTime.

 

Except as described above, and except for the beneficial ownership of the shares of our common stock described in the table below and the Selling Shareholders’ participation in the transactions associated therewith, none of the Selling Shareholders has held any position or office or had any other material relationship with us or any of our predecessors or affiliates within the past three years.

 

Selling Shareholders Table

 

The following table and accompanying footnotes, which were prepared based on information furnished to us by or on behalf of each of the Selling Shareholders and information filed with the SEC, sets forth information regarding the beneficial ownership of shares of our common stock owned by the Selling Shareholders as of May 17, 2019. Beneficial ownership is determined in accordance with rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of a security if that person has the right to acquire beneficial ownership of such security within 60 days.

 

The percentage of shares beneficially owned is based on 51,972,830 shares of our common stock issued and outstanding as of May 17, 2019. Shares of our common stock that a Selling Shareholder has the right to acquire within 60 days of the filing date of this prospectus are deemed outstanding for purposes of computing the percentage ownership of such Selling Shareholder’s holdings, but are not deemed outstanding for purposes of computing the percentage ownership of any other Selling Shareholder. The number of shares and percentage of our outstanding common stock to be beneficially owned after completion of this offering assumes that the Selling Shareholders will sell all the Resale Shares offered hereby. The Selling Shareholders may offer all, some, or none of the Resale Shares. The Selling Shareholders may have sold, transferred, otherwise disposed of or purchased, or may sell, transfer, otherwise dispose of or purchase, at any time and from time to time, shares of our common stock in transactions exempt from the registration requirements of the Securities Act, or in the open market after the date on which they provided the information set forth in the table below. Unless otherwise indicated, and subject to applicable community property laws, we believe that all persons named in the table below have sole voting and investment power with respect to all shares beneficially owned by them.

 

Information concerning the Selling Shareholders may change over time. Any changed information will be set forth in amendments to the registration statement of which this prospectus forms a part or in supplements to this prospectus, if and when necessary or as otherwise required by law.

 

 

		Shares Beneficially Owned Prior to Offering								Shares Being Offered				Shares Beneficially Owned After Offering
Selling Shareholder		Number				Percent				Number				Number				Percent
BioTime, Inc.(1)			14,674,244				28.23	%			14,674,244				—				—
Broadwood Partners, L.P.(2)			9,157,373				17.27				9,157,373				—				—
ALB Private Investments LLC(3)			117,482				*				100,000				17,482				*
Phylis Esposito(4)			50,000				*				50,000				—				—
The Thunen Family Trust(5)			50,000				*				50,000				—				—
Anthony Low-Beer(6)			150,000				*				150,000				—				—
Patrick Lin(7)			191,256				*				76,923				114,333				*
GKarfunkel Family LLC(8)			3,000,000				5.66				1,000,000				2,000,000				3.78
The Bailey 1995 Family Trust(9)			250,769				*				230,769				20,000				*
Seamark Fund, L.P.(10)			150,247				*				50,000				100,247				*

 

* Less than 1%.

 

	(1)	BioTime has sole voting and dispositive power, exercised through its board of directors consisting of more than three people, with respect to all shares of common stock shown as beneficially owned by BioTime.
	(2)	Includes 1,055,961 shares of our common stock that Broadwood may purchase upon the exercise of outstanding Warrants. Broadwood Capital, Inc., or BCI, serves as the General Partner of Broadwood and Neal Bradsher is the President of BCI. BCI and Neal Bradsher have shared voting and dispositive power with respect to, and each may be deemed a beneficial owner of, 9,154,228 shares. Also includes 3,145 shares of our common stock held directly by Neal Bradsher, over which he has sole voting and dispositive power.
	(3)	Consists of (i) 100,000 shares of our common stock that may be acquired upon exercise of outstanding Warrants and (ii) 17,482 shares of our common stock that may be acquired upon exercise of other outstanding warrants. Francis A. Mlynarczyk, Jr., as Manager of ALB Private Investments LLC, may be deemed to have voting and dispositive power over these shares.
	(4)	Consists of 50,000 shares of our common stock that may be acquired upon exercise of outstanding Warrants.
	(5)	Consists of 50,000 shares of our common stock that may be acquired upon exercise of outstanding Warrants. Garret G. Thunen and Carol Thunen, as trustees of The Thunen Family Trust, may be deemed to share voting and dispositive power over these shares.
	(6)	Consists of 150,000 shares of our common stock that may be acquired upon exercise of outstanding Warrants.
	(7)	Includes (i) 76,923 shares of our common stock that may be acquired upon exercise of outstanding Warrants and (ii) 52,447 shares of our common stock that may be acquired upon exercise of other outstanding warrants.
	(8)	Includes 1,000,000 shares of our common stock that may be acquired upon exercise of outstanding Warrants. Henry Reinhold, as Manager of GKarfunkel Family LLC, may be deemed to have voting and dispositive power over these shares.
	(9)	Consists of (i) 230,769 shares of our common stock that may be acquired upon exercise of outstanding Warrants and (ii) vested options to purchase 20,000 shares of our common stock. Don Bailey and Linda Bailey, as co-trustees of The Bailey 1995 Family Trust, may be deemed to share voting and dispositive power over these shares.
	(10)	Includes 50,000 shares of our common stock that may be acquired upon exercise of outstanding Warrants. John D. Fraser and David T. Harrington, as co-Managing Partners of Seamark Fund, L.P., may be deemed to share voting and dispositive power over these shares.

 

 

PLAN OF DISTRIBUTION FOR THE COMPANY

 

We may sell our securities directly to one or more investors. We may also sell our 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:

 

	●	the name or names of any agents, underwriters or dealers;
	●	the purchase price of the securities being offered and the net proceeds we will receive from the sale;
	●	any over-allotment options under which underwriters may purchase additional securities from us;
	●	any agency fees or underwriting discounts and other items constituting agents’ or underwriters’ compensation;
	●	any discounts or concessions allowed or re-allowed or paid to dealers; and
	●	any securities exchanges or markets on which such securities may be listed.

 

We may distribute our securities from time to time in one or more transactions at:

 

	●	a fixed price or prices, which may be changed from time to time;
	●	market prices prevailing at the time of sale;
	●	prices related to such prevailing market prices; or
	●	negotiated prices.

 

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 of 1934, as amended, or 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.

 

 

PLAN OF DISTRIBUTION FOR THE SELLING SHAREHOLDERS

 

Each Selling Shareholder and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their Resale Shares on the NYSE American or any other securities exchange, market or trading facility on which shares of our common stock are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Shareholder may use any one or more of the following methods when selling Resale Shares:

 

	●	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
	●	sales by a broker-dealer of a specified number of such shares at a stipulated price per share, pursuant to agreements between the Selling Shareholder and broker-dealer;
	●	block trades in which the broker-dealer will attempt to sell the Resale Shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
	●	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
	●	an exchange distribution in accordance with the rules of the applicable exchange;
	●	privately negotiated transactions;
	●	settlement of short sales, loans or pledges entered into after the effective date of the registration statement of which this prospectus is a part;
	●	writing or settlement of options, derivative securities or other hedging transactions, whether through an options exchange or otherwise;
	●	a combination of any such methods of sale; or
	●	any other method permitted pursuant to applicable law.

 

The Selling Shareholders may also sell the Resale Shares under Rule 144 under the Securities Act, if available, rather than pursuant to the registration statement of which this prospectus forms a part.

 

Broker-dealers engaged by the Selling Shareholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Shareholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission, and in the case of a principal transaction a markup or markdown, in each case in compliance with Rule 2121 of the Financial Industry Regulatory Authority.

 

In connection with any permitted short sale, loan, pledge, option, derivative or hedging transaction, the Selling Shareholders may enter into agreements with broker-dealers or other financial institution that in turn engage in short sales of our common stock in the course of hedging the positions they assume. If any Resale Shares are delivered to a broker-dealer or other financial institution in connection with any such transaction, the broker-dealer or other financial institution may resell the Resale Shares pursuant to this prospectus (as supplemented or amended to reflect such transaction, including, if necessary, updates to the list of selling shareholders to include such broker-dealer or financial institution).

 

The Selling Shareholders may also transfer and donate the Resale Shares in other circumstances in which case the transferees, donees, pledgees or other successors-in-interest will be the selling beneficial owners for purposes of this prospectus.

 

The Selling Shareholders and any brokers, dealers or agents that are involved in selling the Resale Shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such brokers, dealers or agents and any profit on the resale of any Resale Shares purchased by them may be deemed to be underwriting compensation under the Securities Act. Each Selling Shareholder has advised us that it does not have any written or oral agreement, understanding or arrangement, directly or indirectly, with any broker, dealer, agent or other person regarding the sale of the Resale Shares. There are no underwriters or coordinating brokers acting in connection with the proposed sale of the Resale Shares by the Selling Shareholders.

 

Because the Selling Shareholders may be deemed to be “underwriters” within the meaning of the Securities Act, they may be subject to the requirements of the Securities Act to deliver this prospectus to each purchaser at or prior to the time of the sale. We have informed the Selling Shareholders of this requirement, and we will make copies of this prospectus available to them.

 

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the Resale Shares may not simultaneously engage in market making activities with respect to our common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of our common stock by the Selling Shareholders or any other person.

 

We will pay certain fees and expenses incurred by us incident to the registration of the Resale Shares, including SEC filing fees, fees and expenses of compliance with securities laws, and various related expenses. The Selling Shareholders are responsible for all discounts, selling commissions and other costs related to their offer and sale of the Resale Shares.

 

 

LEGAL MATTERS

 

Unless otherwise indicated in the applicable prospectus supplement, the validity of the securities offered hereby will be passed upon for us by DLA Piper LLP (US), Seattle, Washington.

 

EXPERTS

 

The balance sheets of OncoCyte Corporation as of December 31, 2018 and 2017, and the related statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2018, 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 (other than current reports on Form 8-K, or portions thereof, that are not deemed “filed” pursuant to the General Instructions of Form 8-K):

 

	●	Our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on April 1, 2019, as amended by Amendment No. 1 on Form 10-K/A filed with the SEC on April 30, 2019;
	●	Our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019, as filed with the SEC on May 14, 2019;
	●	Our Current Reports on Form 8-K, as filed with the SEC on January 28, 2019, January 29, 2019, February 12, 2019, March 20, 2019 and April 18, 2019; and
	●	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.

 

All documents that we file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (excluding those portions of such documents furnished to, rather than filed with, the SEC) (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. Our SEC filings are available to the public over the Internet at the SEC’s website 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.

 

 

 

5,058,824 Shares

 

 

Common Stock

 

November 13, 2019

 

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