Successful Restricted Offer Update on Fundraising and Admission

Capitalised terms in this announcement carry the same definitions as in prior announcements in relation to the Fundraising.

Verici Dx plc, a developer of advanced clinical diagnostics for organ transplant, announces the result of the Restricted Offer made to its shareholders, who returned a valid application form to subscribe for Verici Dx Ordinary Shares of £0.001 each (“Verici Shares”) at the Issue Price, being 20 pence per share (the “Restricted Offer”).

The Restricted Offer for up to £0.5 million was significantly oversubscribed as expected.

The Placing, Subscription and Restricted Offer have, in aggregate, raised £14.5 million through the issue of a total of 72,500,000 new Ordinary Shares at the Issue Price.

The allotment and issue of Verici Dx Shares in connection with the Restricted Offer remains conditional upon, among other things, Admission, which is expected to take place on 3 November.

Applicants to the Restricted Offer can confirm their final allotment of shares by contacting the helpline on 0371 664 0321. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 a.m. and 5.30 p.m., Monday to Friday excluding public holidays in England and Wales. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Proposals nor give any financial, legal or tax advice.

Full details of the Fundraising will be contained in the Verici Dx Admission Document, which will be made available shortly before Admission at www.vericidx.com

Enquiries:

Sara Barrington, CEO
Julian Baines, Chairman

www.vericidx.com
Via Walbrook PR

N+1 Singer (Nominated Adviser & Broker)
Aubrey Powell / Kailey Aliyar / Tom Salvesen

Tel: 020 7496 3000

Walbrook PR Limited
Paul McManus / Sam Allen

Tel: 020 7933 8780 or vericidx@walbrookpr.com
Mob: 07980 541 893 / 07748 651 727

Not for release, publication or distribution, directly or indirectly, in whole or in part, in, into or within the United States, Australia, Canada, Hong Kong, Japan, New Zealand, the Republic of South Africa or any other jurisdiction where it is unlawful to distribute this announcement.

22 October 2020

Verici Dx plc

(“Verici Dx” or the “Company”)

Launch of Restricted Offer

Verici Dx plc, a developer of advanced clinical diagnostics for organ transplant, announced earlier today that it proposes to raise up to £14.5 million by means of a proposed placing, subscription and a Restricted Offer (as defined below) (together, the “Fundraising”).

The Company has now written to Qualifying Shareholders to confirm that a restricted offer is being launched, in addition to the placing and subscription, which will enable Qualifying Shareholders in the UK to subscribe for ordinary shares of 0.1p each (“Verici Shares”) at the same issue price, being 20.0 pence per Ordinary Share (the “Restricted Offer”).

As announced separately on 22 October 2020, the Company has received strong levels of funding support for the placing and subscription to raise £14.0 million, with the Restricted Offer being open to acceptances to raise, in aggregate, up to a further £0.5 million.

Gross proceeds for the Fundraising are expected to be £14.5 million in any event, as the Company has discretion to place any Verici Shares not applied for in the Restricted Offer with other investors.

The Restricted Offer is only available to certain persons, being persons who held the beneficial title to any Ordinary Shares of 0.1p each in the capital of the Company as at close of business on 9 July 2020 (the “Record Date”) whose registered address is in the UK (“Qualifying Shareholders”).

Details of the Application Form’s availability are contained within the letter to Qualifying Shareholders. The letter to Qualifying Shareholders and the Application Form set out further details of the Restricted Offer.

Please note that the P-Proof Admission Document is written as of the intended publication date (on or around 3 November) and so describes certain matters that are still in progress as though they have happened.

Qualifying Shareholders who decide to apply for Verici Shares in the Restricted Offer should first read the P-Proof Admission document in its entirety, including but not limited to the Important Information section, Part 1 (Information on Verici Dx plc, the Market Opportunity and Strategy), Part 2 (Risk Factors), the Restricted Offer terms which will apply to any application for Verici Shares made under the Restricted Offer as are set out in Part 7 (Restricted Offer Terms), and the Q&A relating to the Restricted Offer set out in Part 8 (Restricted Offer Q&A).

Any Qualifying Shareholder should carefully consider if a further investment in the Company is suitable for their investment parameters and risk profile and are recommended to take independent advice from their own personal financial adviser, stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the FSMA. For the avoidance of doubt neither the directors of the Company nor Nplus1 Singer Advisory LLP (“N+1 Singer”), the Company’s nominated adviser and corporate broker, is making any recommendation as to what action Qualifying Shareholders should take and the Restricted Offer is being solely organised by the Company.

If you have a query concerning the completion of the Application Form, please telephone the Link Group (the “Receiving Agent”) on 0371 664 0321. Calls are charged at the standard geographic rate and will vary by provider.

Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 a.m. and 5.30 p.m., Monday to Friday excluding public holidays in England and Wales. Please note that the Receiving Agent cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.

Qualifying Shareholders who decide to participate in the Restricted Offer should complete and submit their Application Form in accordance with the instructions provided. If you do not wish to take part in the Restricted Offer then no action is required.

The latest time for receipt of Application Forms is 11.00 a.m. on 28 October 2020.

Following the application period, the Company will announce the result of the Restricted Offer and confirm the finalisation of the Fundraising. The expected admission date for Verici Shares to commence trading on AIM is 8 a.m. on Tuesday, 3 November 2020.

The Company may, in its absolute discretion, offer Verici Shares for which applications have not been made or accepted in the Restricted Offer to participants in the Fundraising or such other persons (who may not be Qualifying Shareholders) as part of the wider Fundraising, as it deems fit.

Enquries:

Sara Barrington, CEO
Julian Baines, Chairman

www.vericidx.com
Via Walbrook PR

N+1 Singer (Nominated Adviser & Broker)
Aubrey Powell / Kailey Aliyar / Tom Salvesen

Tel: 020 7496 3000

Walbrook PR Limited
Paul McManus / Sam Allen

Tel: 020 7933 8780 or vericidx@walbrookpr.com
Mob: 07980 541 893 / 07748 651 727

Key Fundraising Statistics:

Notes:

• Includes gross proceeds of £14.0 million from the placing and subscription, plus £0.5 million from the Restricted Offer. All 2,500,.000 Ordinary Shares available under the Restricted Offer are expected to be issued under full take-up.
• Assumes conversion of existing A shares and the single Golden Share into Ordinary Shares shortly before Admission
• Loan notes worth $2.5 million held by Renalytix AI plc will be converted into the equivalent value of new Ordinary Shares at the Issue Price (using a GBP:USD exchange rate of 1.2714, being the average of the daily closing FX rates over the six month period to 14 October 2020, according to FactSet)

Enquiries:

Not for release, publication or distribution, directly or indirectly, in whole or in part, in, into or within the United States, Australia, Canada, Hong Kong, Japan, New Zealand, the Republic of South Africa or any other jurisdiction where it is unlawful to distribute this announcement.

Verici Dx plc, a developer of advanced clinical diagnostics for organ transplant, announces that it intends to apply to have its issued share capital, as enlarged by a proposed placing, subscription and a Restricted Offer (as defined below) (together, the “Fundraising”), admitted to trading on AIM in due course (“Admission”).

This announcement follows on from recent updates provided by Renalytix AI plc (LSE: RENX) (NASDAQ: RNLX), on 2 September 2020 and 8 July 2020, and this release is being linked to the RENX ticker for information purposes only.

The Company is pleased to confirm that it intends to launch a restricted offer as part of the Fundraising. The restricted offer will enable certain qualifying Company shareholders in the UK to subscribe for ordinary shares in the Company (“Verici Shares”) (the “Restricted Offer”) on the same terms and at the same price per share as participants in the placing and subscription.

The Restricted Offer is only available to certain persons, being persons who held the beneficial title to any A Shares of £0.001 each in the capital of the Company on 10 July 2020 (the “Record Date”) whose registered address is in the UK (“Qualifying Shareholders”) (being persons recorded on the register of members of Renalytix AI plc on 9 July 2020). This document sets out further details of the Restricted Offer.

Full details of the Restricted Offer can be found in the Pathfinder (draft) Admission Document (“Pathfinder”) available online to Qualifying Shareholders only at www.vericidx.com.

Please note that the Pathfinder Admission Document is drafted as though written on the intended publication date of the final form Admission Document, and so describes certain matters that are still in progress as though they have happened.

Qualifying Shareholders who wish to consider applying for Verici Shares in the Restricted Offer should first read the Pathfinder in its entirety, including but not limited to the Important Information section, Part 1 (Information on the Company, the Market Opportunity and Strategy), Part 2 (Risk Factors), the Restricted Offer terms which will apply to any application for Verici Shares made under the Restricted Offer as are set out in Part 7 (Restricted Offer Terms), and the Q&A relating to the Restricted Offer set out in Part 8 (Restricted Offer Q&A).

Any Qualifying Shareholder should carefully consider if a further investment in the Company is suitable for their investment parameters and risk profile and are recommended to take independent advice from their own personal financial adviser, stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the FSMA. For the avoidance of doubt neither the directors of the Company nor Nplus1 Singer Advisory LLP, the Company’s nominated adviser and corporate broker, is making any recommendation as to what action Qualifying Shareholders should take and the Restricted Offer is being organised solely by the Company.

EIS Relief

The Company wishes to draw the attention of Qualifying Shareholders to the provisions of s.164A ITA 2007, which prohibits such a Qualifying Shareholder from claiming EIS tax relief if that Qualifying Shareholder holds the beneficial title to any existing shares in Verici at the time of an issue of new shares (including any Verici Shares to be subscribed for as part of the Restricted Offer) in the Company.

Process for Participating in the Restricted Offer

The application form for participation in the Restricted Offer will only become available online once the Fundraising has been priced following a bookbuild exercise. An announcement will be made confirming that sufficient funds have been raised in the placing and subscription and will confirm the pricing details.  A separate announcement will also confirm that the Restricted Offer will then be open to applications. These announcements are expected on or shortly after Monday 19 October 2020.  Letters will also be sent to Qualifying Shareholders to alert them to the commencement of the Restricted Offer and the availability of the application form.

Qualifying Shareholders who wish to confirm their interest in participating in the Restricted Offer prior to the formal commencement of applications may register their interest through the Company website at the following address www.vericidx.com where they may also register for future shareholder alerts to be sent to them by email.  All such Qualifying Shareholders registering on the website prior to 11.00 a.m. on Friday 16 October 2020 to will also receive an email from the Company or LINK as its agent, alerting them to the commencement of the Restricted Offer and the availability of the application form.

Once open, the Restricted Offer will be open for a maximum of 5 business days and the Company reserves the right to close the Restricted Offer sooner. Qualifying Shareholders are therefore encouraged to register their details electronically via the website to avoid delays in receiving the letter alerting them to the commencement of the Restricted Offer application process and also to check the Company’s website and other news sources from Monday 19 October 2020.

The application form will ONLY be made available online and after the pricing announcement has been made via a regulatory information service, a further letter (and for those Qualifying Shareholders who have registered their details online, also a further email) will be sent containing details of how to access the online form.

Following the application period, the Company will announce the result of the Restricted Offer, confirm the finalisation of the Fundraising and the expected Admission date for Verici Shares to commence trading on AIM.

The Company may, in its absolute discretion, offer any Verici Shares for which applications have not been made or accepted in the Restricted Offer to other participants in the wider Fundraising, including those who may not be Qualifying Shareholders, as it deems fit.

Enquiries:

About Verici Dx plc www.vericidx.com

Verici Dx is developing and commercialising tests to understand how a patient will and is responding to organ transplant, with an initial focus on kidney. One of the most significant threats to a successful transplant, or graft, is the body’s own immune system. Patients’ immune systems differ in how they respond to the presence of the transplanted organ, characterizing this response is called immune phenotyping. Our products and solutions are underpinned by extensive scientific research into the recipient’s immune phenotype and how that impacts on acute rejection, chronic injury and ultimately failure of the transplant. These immuno-profile signatures also inform clinicians as to the optimal strategy for immunosuppressive and other therapies for the most successful treatment to ensure graft acceptance with the least amount of side effects.

The foundational research was driven by a deep understanding of cell-mediated immunity and is enabled by access to expertly curated collaborative studies in highly informative cohorts in kidney transplant.

Disclaimer

This announcement is an advertisement for the purposes of the Prospectus Regulation Rules of the UK Financial Conduct Authority (“FCA”) and is not a prospectus nor an admission document.  This announcement is not and does not constitute, or form part of, and should not be construed as, an offer or invitation to sell, allot or issue or any solicitation of any offer to purchase or subscribe for, any securities of the Company in any jurisdiction, nor shall it (or any part of it) or the fact of its distribution form the basis of, or be relied upon in connection with, or act as any inducement to enter into, any contract or commitment for securities in the Company in any jurisdiction, including in or into the United States, Canada, Australia, the Republic of South Africa or Japan or their respective territories or possessions.. This announcement does not constitute a recommendation regarding any securities.

Prospective investors should not subscribe for or purchase any securities referred to in this announcement except in compliance with applicable securities laws and regulation and on the basis of the information in the Pathfinder, the placing proof of the admission document and the final admission document (“Admission Document”) to be published by the Company, and any supplement thereto, in connection with the Fundraising and the proposed admission of the issued and to be issued ordinary shares to trading on AIM. The information in this announcement is for background purposes only and does not purport to be full or complete.

Sir Ian’s extensive and high level experience with NHS compliments the current Board’s experience with both US and UK healthcare environments

NEW YORK, (September, 2020) — Verici Dx Plc (Verici), announced the appointment to the Board of Directors of Sir Ian Carruthers.  Sir Ian is experienced in the public, private and voluntary sectors and has operated as a Chief Executive within the health service for over twenty years, including as Interim Chief Executive of NHS England, where he oversaw an annual budget of £86 billion and 1.3 million employees.

“We are delighted to welcome Sir Ian to our talented and experienced Board,” said Julian Baines Chairman of the Board, “and we feel that he will make an important contribution as the Company commercializes its products improving kidney transplant care.”

The Company also appointed Sara Barrington as Chief Executive Officer. She brings over 20 years of leadership experience both financially and operationally with a focus upon developing and commercializing life science products.

About Verici Dx

Verici Dx develops tests to understand how a patient will and is responding to organ transplant. One of the most significant threats to a successful transplant, or graft, is the body’s own immune system. Patients’ immune systems differ in how they respond to the presence of the transplanted organ, characterizing this response is called immune phenotyping. Our products and solutions are underpinned by extensive scientific research into the recipient’s immune phenotype and how that impacts on acute rejection, chronic injury and ultimately failure of the transplant. These immuno-profile signatures also inform clinicians as to the optimal strategy for immunosuppressive and other therapies for the most successful treatment to ensure graft acceptance with the least amount of side effects.

The foundational research was driven by a deep understanding of cell-mediated immunity and is enabled by access to expertly curated collaborative studies in highly informative cohorts in kidney transplant.

Download full announcement

NEW YORK, 8 July, 2020 – Renalytix AI plc (LSE: RENX), an artificial intelligence-enabled in vitro diagnostics company, focused on optimizing clinical management of kidney disease to drive improved patient outcomes and lower healthcare costs, announces that it now proposes to distribute shares in its wholly-owned subsidiary, Verici Dx Limited (“Verici”).

Following the approval by shareholders at a general meeting held on 15 May 2020 of the reduction of capital and the confirmation of the High Court in England and Wales on 9 June 2020, the cancellation of the Company’s share premium account has been completed and the reduction of capital became effective on 6 July 2020.

On 7 July 2020 the Board  convened and declared a distribution in specie of shares in Verici to trustees on trust for the Company’s shareholders (the “Distribution”). Verici’s share capital has been re-designated into 59,416,134 A Shares of £0.001 each and 1 golden share of £0.001 (the “Golden Share”). The Golden Share will be the only voting share in the capital of Verici and will be retained by the Company. The Company’s shareholders on the register as at close of business on 9 July 2020 (“Relevant Renalytix Shareholders“) will receive one A Share in Verici (“Distribution Shares”) for every 1 ordinary share held in the Company. Broadway Nominees Limited, as trustees, will act as legal holder of the Distribution Shares and the undertaking can be accessed on the Company’s website under the investor section.

Relevant Renalytix Shareholders will become the beneficial owners of their respective Distribution Shares when the Board resolves to declare the Distribution, at which time an ‘omnibus’ share certificate in respect of the Distribution Shares will be issued, to be held by the trustees on behalf of the Relevant Renalytix Shareholders for a period of:

• 365 days following admission to trading on AIM (or another recognised stock exchange) of all or part of the issued share capital of Verici; or
• if all or part of the issued share capital of Verici is not admitted to trading on AIM (or another recognised stock exchange) within two years of the date that the Distribution is declared, two years from the date that the Distribution is declared, (the “Lock-up Period”).

During the Lock-up Period, Relevant Renalytix Shareholders will not be permitted to transfer the legal or beneficial ownership of their Distribution Shares.

The A Shares and the Golden Share will, on the earlier of the admission to trading of Verici on AIM (or another recognised stock exchange) and two years from the date that the Distribution is declared, automatically convert into Ordinary Shares in Verici on the basis of one Ordinary Share for each A Share or Golden Share held. If Verici is admitted to trading on AIM (or another recognised stock exchange), the Lock-up Period will continue to apply to the converted Ordinary Shares. Upon conversion, the A Shares will rank equally in all respects with the Golden Share (and all other Ordinary Shares) including in respect of voting and dividend rights.

The legal title to the Distribution Shares will be held by Broadway Nominees Limited, as trustees, during the Lock-Up Period. If the A Shares are converted into Ordinary Shares prior to the expiration of the Lock-up Period, Broadway Nominees Limited will withhold its votes in relation to any shareholder resolution of Verici. At the end of the Lock-up Period, Broadway Nominees Limited will execute stock transfer forms to transfer the Distribution Shares to the Relevant Renalytix Shareholders based on a schedule provided by the Company’s registrars.

Relevant Renalytix Shareholders will receive a letter informing them of their beneficial holdings of Distribution Shares shortly after the declaration of the Distribution.

Following the Lock-up Period, Relevant Renalytix Shareholders will receive individual certificates in respect of their Distribution Shares.

On 4 May 2020 the Company transferred the in-licensed FractalDx technology and associated assets to Verici for a consideration of $2,000,000 (“Consideration”). The Consideration was satisfied by the issue of convertible loan notes of Verici in favour of the Company (“Loan Notes”). The Loan Notes are repayable (if the Company so determines), amongst other things, on the completion of a fundraising in Verici or 12 months from the date of the instrument constituting the Loan Notes, unless the Company determines to convert the Loan Notes into ordinary shares in Verici at the time of a fundraising in Verici. The Loan Notes are secured by a debenture over Verici in favour of the Company and  no interest shall accrue on the Loan Notes.

The anticipated timetable for the distribution is:

Related party transaction

As part of RenalytixAI’s preparations for a potential dual-listing on Nasdaq, The Icahn School of Medicine at Mount Sinai (“Mount Sinai”), a substantial shareholder in the Company, has requested that RenalytixAI enter into a registration rights agreement pursuant to which RenalytixAI will, at its own cost and expense, assist Mount Sinai in the registration of Mount Sinai’s ordinary shares for resale under the U.S. Securities Act of 1933, as amended. The registration rights agreement contains customary indemnities given by RenalytixAI in respect of any loss suffered by Mount Sinai and certain of its associated persons (as well as the underwriters on any underwritten follow-on offering by Mount Sinai) arising out of any material misstatements made in or omissions from the public filings related to the potential Nasdaq dual-listing and/or the resale of Mount Sinai’s ordinary shares. These indemnities are of a customary nature and are uncapped.

The entry by RenalytixAI into the registration rights agreement together with the obligations contained within it is deemed to be a related party transaction pursuant to AIM Rule 13 as Mount Sinai is a substantial shareholder in the Company. The directors of the Company, excluding Erik Lium and Barbara Murphy, who are not considered to be independent for this purpose on account of their connection with Mount Sinai, having consulted with the Company’s nominated adviser, Stifel, consider the terms of the registration rights agreement to be fair and reasonable insofar as the Company’s shareholders are concerned.

Download full announcement

Proposed capital reduction and notice of General Meeting

Renalytix AI plc (LSE: RENX), the AIM-traded developer of clinical grade artificial intelligence in vitro diagnostics for kidney disease, announces that a circular (a “Circular”) will today be sent to shareholders providing background to, details of and reasons for, a proposed Capital Reduction and Distribution in Specie, to facilitate the possible spin-out and admission to AIM of FractalDx, the Company’s technology portfolio of diagnostic and prognostic products, in-licensed from Mount Sinai in late 2018. Definitions contained in the Circular have the same meaning as in this announcement.

On 3 March 2020, the Company announced in its half-year report that the Board was considering options for a possible spin-out and admission to AIM of FractalDx. Such a spin-out transaction could:

• provide the opportunity to secure separate financial resources for the FractalDx portfolio, with the goal of enabling accelerated development of FractalDx products and achievement of commercial milestones; and
• allow Shareholders to benefit from both the pure-play value of the FractalDx portfolio of transplant products and the standalone value of KidneyIntelX as it progresses through its own key milestones over the next 12 months and beyond.

The Board has now determined to take the necessary preliminary steps in preparation for a potential spin-out, including the incorporation of a new subsidiary, Verici Dx Limited. The Company has decided to proceed in obtaining the approval necessary for the Capital Reduction which isrequired to implement the Demerger. Notwithstanding that the necessary approval for the Capital Reduction is being sought, these considerations remain at an early stage and there can be no guarantee that the Demerger will be completed. The approval of the Capital Reduction enables the Board to declare distribution in specie of Verici Dx shares to existing RenalytixAI shareholders. Further announcements will be made at the appropriate time.

The Board is seeking approval from Shareholders at the General Meeting to cancel the share premium account of the Company in its entirety in order to create realised profits. The realised profits created by the Capital Reduction will eliminate the accumulated deficit in the Company’s profit and loss account and will be used to implement the Distribution in Specie and improve the Company’s distributable reserves.

Background and reasons for the Capital Reduction and Distribution in Specie

As announced in its half-year report on 3 March 2020, the Company has been evaluating its plans for its FractalDx technology, in-licensed from Mount Sinai in late 2018, which is based on extensive scientific research findings published in leading clinical journals (“FractalDx”). The FractalDx technology is based principally on sequencing biomarkers from a patient’s blood using widely available instrument platforms and the Company is actively developing two products from the portfolio: a prognostic test performed prior to transplant to predict which transplant recipients are most at risk of acute rejection; and a diagnostic test for evidence of rejection of the transplanted kidney in advance of any clinical symptoms. The Board believe that both tests will be instrumental in guiding patient care including immunosuppression therapy dosing to mitigate the toxic side effects and damage to the transplanted kidney due to excessive dosing.

Having considered these plans in further detail, the Board has decided that a spin-out and admission to AIM of FractalDx may provide the opportunity to secure separate financial resources for the FractalDx portfolio, with the goal of enabling accelerated development of FractalDx products and achievement of commercial milestones. It is anticipated that a spin-out pursuant to the Demerger would allow the Company’s shareholders to benefit from both the pure-play value of the FractalDx portfolio of transplant products and the standalone value of KidneyIntelX as it progresses through its own key milestones.

The Company is in the process of completing various steps in anticipation of the implementation of the potential Demerger, including the transfers to Verici Dx Limited, the Company’s recently incorporated wholly owned subsidiary, of the in-licensed FractalDx technology and associated assets (the “Assets”).

The purchase price for the Assets will be their current book value (which is currently $2 million) and these funds will be lent to Verici Dx Limited by the Company pursuant to a secured zero interest inter-company facility agreement (the “Facility”). The Facility allows for Verici Dx Limited to make further drawdowns to be used in the development of the Verici Dx business. The Company may seek full repayment of the Facility on either the date that is twelve months from the date the Facility is entered into (“Anniversary Date”) or on completion of the Fundraising (if prior to the Anniversary Date) or the Company may convert the debt outstanding under the Facility into equity in Verici Dx Limited either: (i) prior to the Distribution in Specie; or (ii) on or around completion of the Fundraising (if prior to the Anniversary Date in both cases), with such equity also being subject to the Lock-In Period.

The Directors believe that the FractalDx portfolio has the potential to deliver significant upside value for Shareholders. The Directors are therefore exploring funding options for that business, including equity funding, and the Directors intend on conducting initial market soundings in order to assist them in determining the feasibility of an initial public offering. Further announcements will be made at the appropriate time.

The Company expects to distribute shares in Verici Dx Limited to Shareholders by way of the Distribution in Specie. However, the Company currently has negative reserve balances. In order to implement the Distribution in Specie, it will therefore first be necessary to create realised profits. Moreover, the Board considers it highly desirable that the Company has the maximum flexibility to consider the payment of dividends and otherwise return value to its shareholders in the future.

The Company’s Share Premium Account currently stands at approximately $50,138,270. As at 31 December 2019 the Company had a retained earnings deficit of $3,216,493. It is proposed that all of the Share Premium Account be cancelled.

The purpose of the cancellation of the Share Premium Account is to eliminate the deficit on the Company’s profit and loss account and to create distributable reserves in the Company to facilitate the:

• Distribution in Specie;
• future consideration of payment of dividends to shareholders where justified by the profits of the Company; and
• the redemption or buy back of the Company’s shares where desirable.

The value of the Distribution in Specie (the “Value”) has not yet been determined and the amount of Verici Dx Shares (the “Ratio”) that each Shareholder would receive pursuant to the Distribution in Specie has not yet been determined. Subject to the results of the market sounding exercise, the Board intends to declare the Distribution in Specie shortly prior to completion of the Fundraising, at which point the Value and the Ratio will be determined and announced to Shareholders via an RIS.

Subject to the results of the market sounding exercise, the Board intends to declare a distribution in specie of:

• the beneficial interest in the Distribution Shares; and
• the right to receive the legal title to the Distribution Shares following the end of the Lock-in Period.

The Company plans to use an external agent to establish a trust over the legal interest in the Distribution Shares for the duration of the Lock-In Period, pursuant to a nominee arrangement. The intention is that the agent will transfer legal title to the Distribution Shares following the end of the Lock-In Period.

Shareholders should note that the Board does not intend to declare the Distribution in Specie until the Fundraising process is near conclusion. The Fundraising process is in its early stages and so the Fundraising and Admission may or may not occur. The Distribution in Specie therefore may or may not occur. In the event that the Distribution in Specie does not occur Verici Dx Limited will remain within the Renalytix Group and continue to be operated as a subsidiary of the Company. The reserves created by the Capital Reduction which were intended to be used in the implementation of the Distribution in Specie will be used, as with the balance of the reserves, to facilitate the future consideration of payment of dividends to Shareholders and the possible redemption or buy back of the Company’s shares where desirable.

Full details are set out in the Circular which has today been posted to Shareholders and is available here: https://renalytixai.com/investors/company-presentation/ in accordance with AIM Rule 20.

Further details on the Capital Reduction procedure

Under the Act, a company limited by shares may reduce or cancel its share premium account as long as it is not restricted from doing so by is articles of association, by obtaining the approval of its shareholders by special resolution and the confirmation of the Court.

The Company is not restricted in any way by its articles of association from carrying out a reduction of capital and is, therefore, seeking approval of its shareholders to the Capital Reduction. If the Shareholders approve the Resolution at the General Meeting, the Board intends to make an application to the Court to obtain its approval to the Capital Reduction as soon as possible following the General Meeting.

Before it confirms the Capital Reduction, the Court will need to be satisfied that the creditors of the Company at the time of the Capital Reduction (including contingent and prospective creditors) cannot show that there is a real likelihood that the Capital Reduction would result in the Company being unable to discharge those debts or claims when they fall due, or that the creditors are otherwise satisfactorily protected. The Company will address those matters in its evidence to the Court, including seeking the consent of some of the Company’s creditors to the Capital Reduction.

Provisional dates have been obtained for the required Court hearings of the Company’s application, but they are subject to change and dependent on the Court’s timetable. If the hearings go ahead on the provisional dates, the present timetable provides that the final hearing, at which it is hoped that the Court will make an order confirming the Capital Reduction, will take place on 9 June 2020.

The Capital Reduction does not take effect until the Court’s order is filed with and registered by Companies House. The Board intends to file the required documentation with Companies House on the business day following the final Court hearing and, subject to compliance with all procedural requirements, Companies House will usually register the documents on the same day. On the present timetable, which is subject to change and dependent on the Court’s timetable, this would mean that the Capital Reduction would take effect on 10 June 2020.

Notice of General Meeting

The Capital Reduction and Distribution in Specie are conditional upon, inter alia, the Shareholders approving the Resolution at the General Meeting.

In light of the current UK Government’s public health advice in response to the COVID-19 outbreak, including to limit travel and public gatherings, and the likelihood that this advice may remain in place at the time of the General Meeting, the Company is holding the General Meeting electronically.

The Circular contains a notice convening the General Meeting to be held electronically at 12.00 p.m. on 15 May 2020 at which the Resolution will be proposed. The Company will provide a facility for Shareholders to join the General Meeting either online or by telephone and there will be an opportunity for Shareholders to ask questions relating to the matters to be dealt with at the General Meeting. In order to facilitate the process, and so that questions can be fully answered at the end of the meeting, the Board would request questions to be submitted in advance, before 5.00 p.m. (BST) on 13 May 2020.

To register for dial-in details and to submit any questions please contact Walbrook PR via email at renalytix@walbrookpr.com or call +44 (0)20 7933 8780.

Shareholders should note that, unless the Capital Reduction is approved at the General Meeting, the spin-out of FractalDx cannot take place.

Recommendation

The Directors consider that the Capital Reduction and Distribution in Specie will promote the success of the Company for the benefit of the Shareholders as a whole. Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolution, as the Directors intend to do in respect of their own beneficial holdings of 16,645,157 Ordinary Shares, representing approximately 28.01 per cent. of the Company’s entire issued share capital as at the date of this document.