Can OncoSil’s $8.7M Raise and Share Consolidation Reset Its Biotech Prospects?

Capital Raising Overview

OncoSil Medical Ltd (ASX: OSL), a clinical-stage biotechnology company, has issued a prospectus dated 26 May 2025 outlining a combined Share Purchase Plan (SPP) and Placement to raise approximately $8.7 million before costs. The offer includes a targeted $2 million SPP for existing eligible shareholders and a $6.7 million Placement to institutional and sophisticated investors.

The SPP allows eligible shareholders in Australia and New Zealand to subscribe for new shares at a price capped at $0.003 per share (pre-consolidation), with one new option issued for every new share subscribed. The Placement offers up to 2.23 billion new shares at the same price, also accompanied by one new option per share, subject to shareholder approval for tranche 2 shares and options.

Share Consolidation and Shareholder Approval

OncoSil is concurrently proposing a 400:1 share consolidation, which will significantly reduce the number of shares on issue and adjust the exercise price of options accordingly. This consolidation is scheduled for a shareholder vote at an Extraordinary General Meeting (EGM) on 29 May 2025. All share and option numbers referenced in the prospectus are on a pre-consolidation basis, with post-consolidation figures provided for context.

Shareholder approval is also required for the issue of tranche 2 Placement shares, all new options under the Placement and SPP, as well as options to the lead manager and shortfall commitment investors. The tranche 1 Placement shares will be issued prior to the EGM without shareholder approval.

Use of Funds and Strategic Focus

The funds raised will be allocated primarily to the build-out of OncoSil’s Macquarie Park manufacturing facility, ongoing clinical trials, and general working capital. The company aims to advance the commercialisation of its OncoSil™ medical device, which remains in clinical development and regulatory approval phases in various markets.

Bell Potter Securities Limited has been appointed as lead manager for the capital raising, receiving a 6% cash commission and options equivalent to 1% of the post-offer issued capital, subject to shareholder approval. The offer is not underwritten but benefits from binding shortfall commitments from two institutional investors to cover up to $2 million of any undersubscription in the SPP.

Risks and Market Considerations

OncoSil’s prospectus highlights the speculative nature of investing in a clinical-stage biotech company, citing risks including funding sufficiency, regulatory hurdles, clinical trial outcomes, manufacturing scale-up challenges, intellectual property protection, and market acceptance. The share price has traded between $0.003 and $0.006 in recent months, with the Placement price representing a discount to recent trading levels.

The proposed share consolidation could impact liquidity and market perception, while the issuance of a large volume of new shares and options will dilute existing shareholders who do not participate in the SPP. The company cautions that shareholder approval is critical for the completion of tranche 2 shares and options issuance, introducing execution risk.

Governance and Director Participation

The board, led by Non-Executive Chairman Douglas Cubbin, encourages existing shareholders to participate in the SPP. Notably, Non-Executive Director Dr Gabriel Liberatore has committed to participate in the SPP for $20,000, subject to shareholder approval. Other directors do not intend to subscribe for additional shares under the offer.

OncoSil also disclosed related party transactions, including agreements with Cyclotek Pty Ltd, a company associated with Chairman Cubbin, for manufacturing services.