As filed with the Securities and Exchange Commission on June 3, 2019.

Registration Statement No. 333-          

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Orchard Therapeutics plc

(Exact name of registrant as specified in its charter)

 

 

 

England and Wales		2836		Not applicable
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

 

 

108 Cannon Street

London EC4N 6EU

United Kingdom

Tel: +44 (0) 20 3808 8286

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Cogency Global Inc.

10 East 40 ^th Street 10 ^th Floor

New York, New York 10016

+1 212 947 7200

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Mitchell S. Bloom Michael H. Bison Goodwin Procter LLP 100 Northern Avenue Boston, MA 02210 (617) 570-1000		Andrew Harrow Goodwin Procter (UK) LLP 100 Cheapside London EC2V 6DY United Kingdom +44 20 7447 4200		Deanna L. Kirkpatrick Marcel R. Fausten Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 (212) 450-4000

 

 

Approximate date of commencement of proposed sale to public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.   ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act.

Emerging growth company   ☑

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards ^† provided pursuant to Section 7(a)(2)(B) of the Securities Act.   ☐

 

†

The term “new or revised financial accounting standards” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

CALCULATION OF REGISTRATION FEE

 

Title of each class of securities being registered		Amount to be registered(1)		Proposed maximum offering price per share(2)		Proposed maximum aggregate offering price(2)		Amount of registration fee
Ordinary shares, nominal value £0.10 per share(3)		10,350,000		$18.71		$193,648,500		$23,471

 

(1)

Includes shares represented by American Depositary Shares, or ADSs, that are issuable upon exercise of the underwriters’ option to purchase additional shares.

 

(2)

Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based on the average of the high and low prices of the registrant’s ADSs as reported on the Nasdaq Global Select Market on May 31, 2019.

 

(3)

These ordinary shares are represented by ADSs, each of which represents one ordinary share of the registrant. ADSs issuable upon deposit of the ordinary shares registered hereby have been registered pursuant to a separate registration statement on Form F-6 (File No. 333-227905).

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), shall determine.

 

 

 

The information contained in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

Subject to completion, dated June 3, 2019

Preliminary prospectus

9,000,000 American depositary shares

Representing 9,000,000 ordinary shares

 

We are offering 9,000,000 American Depositary Shares, or ADSs. Each ADS represents one ordinary share. The ADSs may be evidenced by American Depositary Receipts, or ADRs.

The public offering price is $         per ADS. Our ADSs are listed on the Nasdaq Global Select Market under the symbol “ORTX.” On May 31, 2019, the last reported sale price of our ADSs on the Nasdaq Global Select Market was $18.91 per share.

Investing in our ADSs involves a high degree of risk. Before buying any ADSs, you should carefully read the discussion of material risks of investing in our ADSs in “ Risk factors ” beginning on page 21 of this prospectus.

We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012 and a “foreign private issuer” under applicable U.S. federal securities laws. As such, we have elected to comply with certain reduced public company reporting requirements. See “Prospectus summary—implications of being an emerging growth company and a foreign private issuer” for additional information.

Neither the U.S. Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 

		Per ADS				Total
Public offering price		$				$
Underwriting discount(1)		$				$
Proceeds to Orchard Therapeutics plc, before expenses		$				$

 

(1)

See “Underwriting” for additional information regarding underwriting compensation.

Delivery of the ADSs is expected to be made on or about                , 2019. We have granted the underwriters an option for a period of 30 days to purchase an additional 1,350,000 ADSs. If the underwriters exercise the option in full, the total underwriting discounts payable by us will be $         million, and the total proceeds available to us, before expenses, will be $         million, assuming a midpoint of the range.

 

J.P. Morgan		Goldman Sachs & Co. LLC		Cowen		Barclays

Lead Manager

Guggenheim Securities

Co-Manager

Wedbush PacGrow

Prospectus dated                , 2019

Table of contents

 

		Page
Market, industry and other data			1
About this prospectus			2
Presentation of financial information			3
Prospectus summary			4
The offering			19
Risk factors			21
Special note regarding forward-looking statements			26
Use of proceeds			28
Dividend policy			30
Capitalization			31
Dilution			33
Selected consolidated financial data			34
Management			36
Related party transactions			37
Principal shareholders			41
Description of share capital and articles of association			44
Description of American depositary shares			61
Shares and ADSs eligible for future sale			74
Material income tax considerations			76
Underwriting			87
Expenses of this offering			96
Legal matters			97
Experts			98
Service of process and enforcement of liabilities			99
Where you can find additional information			101
Incorporation by reference of certain documents			102

We are responsible for the information contained in this prospectus and any free writing prospectus we prepare or authorize. We have not, and the underwriters have not, authorized anyone to provide you with different information, and we and the underwriters take no responsibility for any other information others may give you. We are not, and the underwriters are not, making an offer to sell our ADSs in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or the sale of any ADSs.

For investors outside the United States: Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction, other than the United States, where action for that purpose is required. Persons outside the

 

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United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the ADSs and the distribution of this prospectus outside the United States.

We are incorporated under the laws of England and Wales. Under the rules of the U.S. Securities and Exchange Commission, or the SEC, we are currently considered a “foreign private issuer.” As a foreign private issuer, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

 

 

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Market, industry and other data

This prospectus contains estimates, projections and other information concerning our industry, our business, and the markets for our product candidates. 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. Unless otherwise expressly stated, we obtained this industry, business, market and other data from our own internal estimates and research as well as from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.

In addition, assumptions and estimates of our and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled “Risk factors.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Special note regarding forward-looking statements.”

 

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About this prospectus

In connection with our initial public offering, we completed a corporate reorganization, pursuant to which Orchard Therapeutics Limited (now known as Orchard Therapeutics (Europe) Limited) became a wholly-owned subsidiary of Orchard Rx Limited (now known as Orchard Therapeutics plc), a newly formed holding company with nominal assets and no liabilities, contingencies, or commitments, which was formed to effect the corporate reorganization. Orchard Rx Limited was re-registered as a public limited company and changed its name from Orchard Rx Limited to Orchard Therapeutics plc. For more details on the corporate reorganization, see Note 7 to our audited consolidated financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2018 incorporated herein by reference.

Unless otherwise indicated or the context otherwise requires, all references in this prospectus to the terms “Orchard Therapeutics Limited,” “Orchard Rx Limited,” “Orchard Therapeutics plc,” “the company,” “we,” “us” and “our” refer to (i) Orchard Therapeutics Limited and its wholly-owned U.S. subsidiary prior to the completion of our corporate reorganization, (ii) Orchard Rx Limited and its subsidiaries after the completion of our corporate reorganization and (iii) Orchard Therapeutics plc and its subsidiaries after the re-registration of Orchard Rx Limited as a public limited company on October 29, 2018. See Note 7 to our audited consolidated financial statements included in our Annual Report on Form 20-F for the fiscal year ended December 31, 2018 incorporated herein by reference.

We own various trademark registrations and applications, and unregistered trademarks, including Orchard Therapeutics plc and our corporate logo. All other trade names, trademarks and service marks of other companies appearing in this prospectus are the property of their respective holders. Solely for convenience, the trademarks and trade names in this prospectus may be referred to without the ^® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend to use or display other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

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Presentation of financial information

Although we are a UK company, the functional currency of our reporting entity is the U.S. Dollar and we prepare our consolidated financial statements in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, as issued by the Financial Accounting Standards Board. All references in this prospectus to “$” are to U.S. Dollars and all references to “£” are to pounds sterling. Unless otherwise indicated, certain pounds sterling amounts contained in this prospectus have been translated into U.S. Dollars at the rate of $1.2687 to £1.00, which was the noon buying rate of the Federal Reserve Bank of New York on December 31, 2018, the last business day of the fiscal year ended December 31, 2018. These translations should not be considered representations that any such amounts have been, could have been or could be converted into pounds sterling at that or any other exchange rate as of that or any other date.

We have made rounding adjustments to some of the figures included in this prospectus. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them. We have historically conducted our business through Orchard Therapeutics Limited and our U.S. subsidiary, and therefore our historical consolidated financial statements previously presented the consolidated results of operations of Orchard Therapeutics Limited. Following our reorganization that we completed in connection with our initial public offering, our consolidated financial statements present the consolidated results of operations of Orchard Therapeutics plc.

 

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Risk factors

Investing in our ADSs involves a high degree of risk. Before you invest in our ADSs, you should carefully consider the following risks, as well as general economic and business risks, including those set forth under the heading “Risk Factors” in our Annual Report on Form 20-F for the fiscal year ended December 31, 2018 incorporated by reference herein, and all of the other information contained in this prospectus and in the documents incorporated by reference herein. Any of the following risks, including those discussed in the documents incorporated by reference herein, could have a material adverse effect on our business, operating results and financial condition and cause the trading price of our ADSs to decline, which would cause you to lose all or part of your investment. When determining whether to invest, you should also refer to the other information contained or incorporated by reference in this prospectus, including our financial statements and the related notes thereto. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us may also adversely affect our business

Risks related to this offering and ownership of our securities

The market price of our ADSs may be highly volatile, and may fluctuate due to factors beyond our control. An active public trading market for our ADSs may not be sustained.

We completed our initial public offering in November 2018. Prior to that time, there was no public trading market for our ADSs or ordinary shares. Although we have completed our initial public offering and our ADSs are listed and trading on the Nasdaq Global Select Market, an active trading market for our ADSs may not be sustained. If an active market for our ADSs is not sustained, it may be difficult for existing shareholders to sell our ADSs without depressing the market price for our securities or at all. An inactive trading market may also impair our ability to raise capital to continue to fund operations by selling ADSs and may impair our ability to acquire other companies or assets by using our ADSs as consideration.

In addition, the trading price of our ADSs has fluctuated, and is likely to continue to fluctuate significantly. The market price of our ADSs depends on a number of factors, some of which are beyond our control. In addition to the factors discussed in this “Risk factors” section and in the “Risk Factors” section of our Annual Report on Form 20-F for the year ended December 31, 2018, these factors include:

 

•

adverse results or delays in preclinical studies or clinical trials;

 

•

reports of adverse events in other gene therapy products or clinical trials of such products;

 

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an inability to obtain additional funding;

 

•

failure by us to successfully develop and commercialize our product candidates;

 

•

failure by us to maintain our existing strategic collaborations or enter into new collaborations;

 

•

failure by us or our licensors and strategic partners to prosecute, maintain or enforce our intellectual property rights;

 

•

changes in laws or regulations applicable to future products;

 

•

an inability to obtain adequate product supply for our product candidates or the inability to do so at acceptable prices;

 

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•

adverse regulatory decisions;

 

•

the introduction of new products, services or technologies by our competitors;

 

•

failure by us to meet or exceed financial projections we may provide to the public;

 

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failure by us to meet or exceed the financial projections of the investment community;

 

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the perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community;

 

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announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us, our strategic partner or our competitors;

 

•

disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;

 

•

additions or departures of key scientific or management personnel;

 

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significant lawsuits, including patent or shareholder litigation;

 

•

changes in the market valuations of similar companies;

 

•

sales of our ADSs by us or our shareholders in the future; and

 

•

the trading volume of our ADSs.

In addition, companies trading in the stock market in general, and Nasdaq in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our ADSs, regardless of our actual operating performance.

If you purchase ADSs in this offering, you will suffer immediate dilution of your investment.

The public offering price of our ADSs is substantially higher than the adjusted net tangible book value per ADS. Therefore, if you purchase ADSs in this offering, you will pay a price per ADS that substantially exceeds our adjusted net tangible book value per ADS after this offering. Based on an assumed public offering price of $18.91 per ADS (which was the last reported sale price of our ADSs on the Nasdaq Global Select Market on May 31 , 2019), you will experience immediate dilution of $14.22 per ADS, representing the difference between our adjusted net tangible book value per ADS after this offering and the public offering price per ADS. After this offering, we will also have outstanding options to purchase ordinary shares with exercise prices lower than the public offering price. To the extent these outstanding options are exercised, there will be further dilution to investors in this offering. For further information regarding the dilution resulting from this offering, see the section titled “Dilution” in this prospectus.

Concentration of ownership of our ordinary shares (including ordinary shares in the form of ADSs) among our existing executive officers, directors and principal shareholders may prevent new investors from influencing significant corporate decisions.

Our executive officers, directors, greater than five percent shareholders and their affiliates beneficially own approximately 66.6% of our ordinary shares and, upon closing of this offering,

 

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that same group will beneficially own approximately 60.5% of our outstanding ordinary shares. Depending on the level of attendance at our general meetings of shareholders, these shareholders either alone or voting together as a group may be in a position to determine or significantly influence the outcome of decisions taken at any such general meeting. Any shareholder or group of shareholders controlling more than 50% of the share capital present and voting at our general meetings of shareholders may control any shareholder resolution requiring a simple majority, including the appointment of board members, certain decisions relating to our capital structure, the approval of certain significant corporate transactions and amendments to our Articles of Association. Among other consequences, this concentration of ownership may prevent or discourage unsolicited acquisition proposals that you may believe are in your best interest as one of our shareholders. Some of these persons or entities may have interests different than yours. For example, because many of these shareholders purchased their ordinary shares at prices substantially below the price at which ADSs are being sold in this offering and have held their ordinary shares for a longer period, they may be more interested in selling our company to an acquirer than other investors or they may want us to pursue strategies that deviate from the interests of other shareholders.

Future sales, or the possibility of future sales, of a substantial number of our securities could adversely affect the price of the shares and dilute shareholders.

If our existing shareholders sell, or indicate an intent to sell, substantial amounts of our securities in the public market, the trading price of the ADSs could decline significantly and could decline below the public offering price in this offering. Upon completion of this offering, and assuming no exercise of the underwriters’ option to purchase additional ADSs, we will have 94,867,028 outstanding ordinary shares (including ordinary shares represented by the ADSs), of which approximately 625,075 are subject to a 90-day contractual lock-up. The representatives of the underwriters may permit us and the holders of the lock-up shares to sell shares or ADSs prior to the expiration of the lock-up agreements. See “Underwriting.” After the lock-up agreements pertaining to this offering expire, and based on the number of ordinary shares (including ordinary shares represented by ADSs) outstanding upon completion of this offering, these approximately 625,075 additional ordinary shares will be eligible for sale in the public market, all of which shares are held by directors and certain members of our executive management and will be subject to volume limitations under Rule 144 under the Securities Act of 1933, as amended, or the Securities Act, for sales in the United States. In addition, ordinary shares subject to outstanding options under our equity incentive plans and the ordinary shares reserved for future issuance under our equity incentive plans are eligible for sale in the public market in the future, subject to volume limitations applicable to affiliates and the lock-up agreements described in the “Shares and ADSs eligible for future sale” section of this prospectus.

Holders of ADSs are not treated as holders of our ordinary shares.

By participating in this offering you will become a holder of ADSs with underlying ordinary shares in a company incorporated under English law. Holders of ADSs are not treated as holders of our ordinary shares, unless they withdraw the ordinary shares underlying their ADSs in accordance with the deposit agreement and applicable laws and regulations. The depositary is the holder of the ordinary shares underlying the ADSs. Holders of ADSs therefore do not have any rights as holders of our ordinary shares, other than the rights that they have pursuant to the deposit agreement. See “Description of American depositary shares.”

 

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Because we do not anticipate paying any cash dividends on our ADSs in the foreseeable future, capital appreciation, if any, will be your sole source of gains and you may never receive a return on your investment.

Under current English law, a company’s accumulated realized profits must exceed its accumulated realized losses (on a non-consolidated basis) before dividends can be declared and paid. Therefore, we must have distributable profits before declaring and paying a dividend. We have not paid dividends in the past on our ordinary shares. We intend to retain earnings, if any, for use in our business and do not anticipate paying any cash dividends in the foreseeable future. As a result, capital appreciation, if any, on our ADSs will be your sole source of gains for the foreseeable future, and you will suffer a loss on your investment if you are unable to sell your ADSs at or above the public offering price. Investors seeking cash dividends should not purchase our ADSs in this offering.

A significant portion of our total outstanding ordinary shares are restricted from immediate resale but may be sold into the market in the near future, which could cause the market price of our ADSs to drop significantly.

Sales of a substantial number of our ADSs in the public market could occur at any time, subject to certain restrictions described below. These sales, or the perception in the market that holders of a large number of ADSs intend to sell, could reduce the market price of our ADSs. After this offering, assuming no exercise of the underwriters’ option to purchase additional ADSs, we will have outstanding 94,867,028 ordinary shares based on the number of ordinary shares outstanding as of March 31, 2019, (or 96,217,028 ordinary shares if the underwriters exercise their option to purchase additional ADSs in full). This includes the 9,000,000 ADSs that we are selling in this offering (or 10,350,000 ADSs if the underwriters exercise their option to purchase additional ADSs in full), which may be resold in the public market immediately without restriction, unless purchased by our affiliates. 625,075 shares currently are restricted as a result of securities laws or lock-up agreements but will be able to be sold after the offering as described in the “Shares and ADSs eligible for future sale” and “Underwriting” sections of this prospectus. Moreover, after this offering, holders of an aggregate of approximately 32,862,902 ordinary shares will have rights, subject to certain conditions, to require us to file registration statements covering their ordinary shares or to include their ordinary shares in registration statements that we may file for ourselves or other shareholders. In addition, 12,576,677 ordinary shares reserved for issuance upon the exercise of existing options outstanding as of March 31, 2019 under our current equity incentive plans will become eligible for sale in the public market, subject to volume limitations applicable to affiliates and the lock-up agreements described in the “Underwriting” section of this prospectus.

In addition, J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC, Cowen and Company, LLC and Barclays Capital Inc. may, in their sole discretion, release all or some portion of the ordinary shares subject to lock-up agreements at any time and for any reason. Sales of a substantial number of such ordinary shares upon expiration of the lock-up agreements, the perception that such sales may occur, or early release of these agreements, could cause our market price to fall or make it more difficult for you to sell your ADSs at a time and price that you deem appropriate.

 

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We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

Our management will have broad discretion in the application of the net proceeds from this offering, including for any of the purposes described in the section entitled “Use of proceeds,” and you will not have the opportunity as part of your investment decision to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our shareholders.

 

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Special note regarding forward-looking statements

This prospectus and the documents incorporated by reference into it contain express or implied forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties. All statements other than statements of historical fact, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. In some cases, you can identify forward-looking statements by the words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. The forward-looking statements and opinions contained in this prospectus are based upon information available to our management as of the date of this prospectus and, while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Forward-looking statements contained in this prospectus include, but are not limited to, statements about:

 

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the timing, progress and results of clinical trials and preclinical studies for our programs and product candidates, including statements regarding the timing of initiation and completion of trials or studies and related preparatory work, the period during which the results of the trials will become available and our research and development programs;

 

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the timing, scope or likelihood of regulatory submissions, filings, and approvals;

 

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our ability to develop and advance product candidates into, and successfully complete, clinical trials;

 

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our expectations regarding the size of the patient populations for our product candidates, if approved for commercial use;

 

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the implementation of our business model and our strategic plans for our business, commercial product, product candidates and technology;

 

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our commercialization, marketing and manufacturing capabilities and strategy;

 

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the pricing and reimbursement of our commercial product and product candidates, if approved;

 

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the scalability and commercial viability of our manufacturing methods and processes, including our plans to develop our in-house manufacturing operations;

 

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the rate and degree of market acceptance and clinical utility of our commercial product and product candidates, in particular, and gene therapy, in general;

 

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our ability to establish or maintain collaborations or strategic relationships or obtain additional funding;

 

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our competitive position;

 

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the scope of protection we and/or our licensors are able to establish and maintain for intellectual property rights covering our commercial product and product candidates;

 

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developments and projections relating to our competitors and our industry;

 

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our expectations related to the use of proceeds from this offering;

 

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our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

 

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the impact of laws and regulations;

 

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our ability to contract with third party suppliers and manufacturers and their ability to perform adequately;

 

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our ability to attract and retain qualified employees and key personnel;

 

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our expectations regarding the time during which we will be an emerging growth company under the JOBS Act; and

 

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other risks and uncertainties, including those listed under the caption “Risk factors” in this prospectus as well as those risk factors that are incorporated by reference in this prospectus.

You should refer to the important factors in the cautionary statements included in this prospectus and in other documents incorporated herein for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements included or incorporated by reference in this prospectus will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement of which this prospectus is a part completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

 

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Use of proceeds

We estimate that the net proceeds to us in this offering will be $157.6 million, after deducting the estimated underwriting discounts and estimated offering expenses payable by us, based on an assumed public offering price of $18.91 per ADS, which was the last reported sale price of our ADSs on the Nasdaq Global Select Market on May 31, 2019. If the underwriters exercise their option to purchase additional ADSs in full, we estimate that the net proceeds to us from this offering will be $181.4 million, after deducting the estimated underwriting discounts and estimated offering expenses payable by us.

Each $1.00 increase (decrease) in the assumed public offering price of $18.91 per ADS would increase (decrease) the net proceeds to us from this offering by $8.4 million, assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same. An increase (decrease) of 1,000,000 in the number of ADSs we are offering would increase (decrease) the net proceeds to us from this offering by $17.6 million, assuming the assumed public offering price remains the same.

We expect to use the net proceeds from this offering as follows:

 

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approximately $70 million initiating trials to support registrations for OTL-102 for X-CGD and OTL-300 for TDT, establishing clinical proof of concept for OTL-201 for MPS-IIIA and OTL-203 for MPS-I, further progressing OTL-202 for MPS-IIIB and advancing our numerous additional preclinical programs;

 

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approximately $10 million to fund the ongoing commercialization of Strimvelis in the European Union and to expand our marketing and sales infrastructure in key markets, including the United States and Europe, in preparation for the potential commercial approval of OTL-101, OTL-200 and OTL-103;

 

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approximately $20 million to fund the ongoing development of our late-stage clinical product candidates, including completing registrational trials and submitting for regulatory approvals in the United States and Europe for OTL-101 for ADA-SCID, OTL-200 for MLD and OTL-103 for WAS; and

 

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the remainder to fund ongoing business development activities, general and administrative expenses, working capital and other general corporate purposes.

This expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. We may also use a portion of the net proceeds to in-license, acquire, or invest in additional businesses, technologies, products or assets. We cannot predict with certainty all of the particular uses for the net proceeds to be received upon the closing of this offering or the amounts that we will actually spend on the uses set forth above. Predicting the cost necessary to commercialize approved products and develop product candidates can be difficult and the amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our development, our plans to develop our in-house drug product and vector manufacturing capabilities, the status of and results from clinical trials, any collaborations that we may enter into with third parties for our product candidates and any unforeseen cash needs. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering.

 

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Based on our planned use of the net proceeds from this offering and our existing cash, we estimate that such funds will be sufficient to fund our operations and capital expenditure requirements into the second half of 2021. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect.

Pending our use of proceeds from this offering, we plan to invest these net proceeds in a variety of capital preservation instruments, including short-term, interest bearing obligations and investment-grade instruments.

 

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Dividend policy

We have never declared or paid any cash dividend, and we do not anticipate declaring or paying any cash dividends in the foreseeable future. We intend to retain all available funds and any future earnings to fund the development and expansion of our business. See the section titled “Risk factors—Risks related to this offering and ownership of our securities—Because we do not anticipate paying any cash dividends on our ADSs in the foreseeable future, capital appreciation, if any, will be your sole source of gains and you may never receive a return on your investment.”

Under English law, among other things, we may only pay dividends if we have sufficient distributable reserves (on a non-consolidated basis), which are our accumulated realized profits that have not been previously distributed or capitalized less our accumulated realized losses, so far as such losses have not been previously written off in a reduction or reorganization of capital.

 

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