Rhythm Biosciences’ $4.5M–$6M Underwriting Deal Supports Diagnostic Platform Expansion
Rhythm Biosciences has locked in a partial underwriting deal worth between $4.5 million and $6 million, strengthening its financial footing as it advances the commercial launch of its ColoSTAT® and geneType™ diagnostic platforms.
- Underwriting agreement with CPS Capital Group for listed options expiring March 31, 2026
- Minimum $4.5 million and maximum $6 million funding secured before costs
- Up to 30 million shortfall shares to be issued if options remain unexercised
- Funds targeted for commercialisation of ColoSTAT® and geneType™ platforms and working capital
- Underwriter to receive fees and additional options as part of the agreement
Underwriting Deal Strengthens Capital Position
Rhythm Biosciences Ltd (ASX: RHY), an Australian medical diagnostics company focused on early cancer detection, has entered into a binding underwriting agreement with CPS Capital Group Pty Ltd. This arrangement partially underwrites the exercise of Rhythm’s listed options (ASX: RHYO) that expire on 31 March 2026, providing a guaranteed capital injection ranging from $4.5 million to $6 million before costs.
The underwriting agreement ensures that if option holders do not fully exercise their rights, CPS Capital will subscribe for up to 30 million shortfall shares, representing the maximum underwriting commitment of $6 million. This financial backing offers Rhythm Biosciences a stronger funding platform as it pushes forward with the commercial rollout of its ColoSTAT® and geneType™ diagnostic testing platforms.
Supporting Commercialisation and Growth
The funds raised through this exercise and any shortfall shares will be directed towards accelerating the commercialisation of Rhythm’s flagship ColoSTAT® blood test for colorectal cancer detection, as well as expanding the geneType™ genetic risk assessment platform. Both products aim to improve early cancer detection and personalised health insights, addressing significant unmet needs in preventative healthcare.
CEO Dr David Atkins highlighted the importance of this underwriting arrangement in providing increased funding certainty. With the capital secured, Rhythm Biosciences is better positioned to execute its commercial strategy domestically and internationally, enhancing its ability to bring these innovative diagnostic solutions to market.
Terms and Conditions of the Underwriting
The underwriting agreement includes customary termination events such as significant market falls, material adverse changes in the company’s condition, insolvency, and regulatory actions. The underwriter will receive fees comprising a 2% management fee and a 4% underwriting fee on the final amount raised, along with 3 million options plus additional options on a one-for-three basis relative to shares underwritten.
These options to the underwriter will be issued under existing ASX Listing Rules, potentially subject to shareholder approval. The company intends to issue any shortfall shares under ASX Listing Rule 7.2 Exception 10 or within its placement capacity, ensuring compliance with regulatory requirements.
Looking Ahead
Rhythm Biosciences’ ability to secure this underwriting deal reflects investor confidence in its diagnostic platforms and commercial prospects. As the expiry date for the listed options approaches, the market will be watching closely to see the level of option exercise and the ultimate capital raised. This funding milestone is a critical step in Rhythm’s journey to reduce the global burden of cancer through early detection technologies.
Bottom Line?
With underwriting secured, Rhythm Biosciences is poised to accelerate its cancer diagnostic rollout, but option exercise levels will be key to watch.
Questions in the middle?
- Will option holders exercise their rights fully, or will CPS Capital need to subscribe for the full shortfall?
- How will the additional capital impact the commercial adoption of ColoSTAT® and geneType™ platforms?
- What market or regulatory events could trigger termination of the underwriting agreement before completion?
