Glyconics EIS – existing shareholders only

Opportunity to invest at a discount to Series A round (investment-committee-approved term sheet and completed due diligence)

Glyconics Ltd (“Glyconics” or “the Company”) has developed a patented application of Infrared Spectroscopy (IRS) for diabetes screening in minutes. It uses a miniaturised, handheld spectrometer to measure levels of absorption of infrared radiation by molecules in fingernails and uses a proprietary algorithm to analyse results. 

Following the completion of a lengthy technical due diligence process, Glyconics has received an investment-committee-approved term sheet from UCEA Capital Partners (“UCEA”), an international family office with a focus on early-stage health tech investments. UCEA has paid all due diligence costs and a non-refundable commitment fee of £100k to Glyconics. 

UCEA proposes to invest £5 million and lead the Series A round at a pre-money valuation of £12 million – an uplift of c.44% to last round post-money valuation of £8.3 million, predicated on the Company obtaining the CE mark, expected in September 2024 – not guaranteed.

To provide liquidity until then, the Company is launching a funding round ahead of  the UCEA-led Series A. The current round is only open to existing investors and presents an opportunity to invest at a discounted valuation of £10.8 million – a reward for their continuing support – and to minimise dilution. The deadline for applications is 12 July. Should there be remaining capacity after this, the round may be open to new investors.

Subject to completing the Series A as planned, management believes the Company can deliver rapid growth to approximately £84 million revenue and £52 million EBITDA over the next 5 years – not guaranteed.  

Predicated on these forecasts, target return for this round is approximately 13x in year 5 – not guaranteed. 

The round is expected to be EIS qualifying. Glyconics last issued EIS certificates in October 2023 and there have been no material changes to the nature or structure of the business since. Management has applied for – and is waiting to receive – Advance Assurance for this round. 

Existing investors will also have the opportunity to participate in the Series A round at the £12 million valuation should they wish, alongside new investors. 

Please read all investment documents prepared by the Company carefully to form your own view.

The deal at a glance

Developments since last trading update

Since the last trading update in February 2024, Glyconics has completed the pre-CE mark study, ANODE03. The team is currently working on the results which are expected to be available in the next few weeks. Management reports that initial results from ANODE03 look to be promising and in line with those recorded in ANODE01 and ANODE02, but the data will need full analysis prior to submission for final review.

Management believes that there is still no non-invasive diabetes screening technology on the market. In the last IM, management identified two potential competitors: Occuity and DiaMonTech. One is using light absorption in the optic nerve for diabetes screening, the second is using IRS technology for glucose monitoring in relation to diabetes. As of June 2024 – neither has successfully launched a product to the market. 

Watch a video demonstration of how the technology works (video produced by Glyconics in January 2024)

See the IM for further details on the product and Glyconics intellectual property and material contracts.

Current trading

Glyconics is a pre-revenue business with a current cash burn rate of c.£100k per month. This is expected to increase to c.£300k per month as the company scales up to bring the product to market. 

Accordingly, it continues to require investor funds for liquidity and is expected to be funded by the Series A round, until the Company delivers trading profits and becomes cash generative, forecast in year 3 – not guaranteed.

For more detailed financial information, forecasts, and assumptions please refer to the Financials, Capital Structure and Target Returns Overview.

Revenue model and growth strategy

Management expects to sell the devices B2B to existing diabetes-screening providers such as pharmacies, GPs, and Community Health Centres on three-year contracts both directly and through overseas distributors. 

The milestones to bring the device to market are: 

• Q2 2024: close £7.5 million Series A round
• Q3 2024: submission of CE mark technical file 
• Q4 2024: CE mark granted
  
• Q1 2025: first commercial sales expected 
  

The Company forecasts to be consistently profitable and cash generative by the end of Y3 – not guaranteed. The Company may look to raise additional capital during the forecast period to take advantage of new commercial opportunities.

Please refer to the IM for further information.

Private offer

Glyconics has received a £5 million term sheet from lead investor UCEA in a planned £7.5 million Series A round at a fully diluted pre-money valuation of £12 million. 

UCEA is a Portuguese family office with a focus on long-term investing. To date, UCEA has made several investments into early-stage healthcare businesses. Full deployment of UCEA’s funds is expected by end of September 2024 – not guaranteed – and is contingent on hitting commercial milestones, including obtaining the CE mark.

On signing the term sheet, UCEA provided a non-refundable £100k commitment fee. 

In order to streamline the CE mark process, Management has pre-booked its submission review for August and believes that it is on track to deliver the CE mark by the end of September/early Q4 – not guaranteed.

Existing shareholders can invest ahead of the Series A, at a fully diluted pre-money valuation of £10.8 million. The previous round was completed at a fully diluted post-money valuation of £8.3 million.

Investment will be into EIS-qualifying Ordinary Shares and the round itself is expected to be EIS qualifying. The Series A investment is also expected to be into Ordinary Shares. 

The deadline for cleared funds is 5pm, 12 July after which time it may be made available to new investors, subject to capacity.

For the full capital table and more information on the valuation of the round, please refer to the Financials, Capital Structure and Target Returns Overview.

Risks – important

This is a single company offer with no diversification. It involves investing in an early-stage, pre-revenue and loss-making business, which is by nature high risk and prone to failure. There is a risk that the capital raised may not be sufficient to achieve the Company’s objectives. You could lose all the amount you invest.

Like all investments available through Wealth Club, it is only for experienced investors happy to make their own investment decisions without advice.

There is no ready market for unlisted EIS shares: they are illiquid and hard to sell and value. There will need to be an exit for you to receive a realised return on your investment.

Exits are likely to take considerably longer than the three-year minimum EIS holding period; equally, an exit within three years could impact tax relief. The value of tax benefits depends on circumstances and tax rules can change. 

Before you invest, please carefully read the Information Memorandum which contains further details on the considerable risks – alongside the Wealth Club Risks and Commitments.

Fees and structure

Investors will pay no direct initial or ongoing charges to invest. Fundraising costs are being met by the Company. Wealth Club will be entitled to a performance fee on exit. 

Wealth Club investors will invest using a nominee structure. This service is provided by Wealth Club’s subsidiary companies Wealth Club Asset Management Limited (authorised and regulated by the FCA) and Wealth Club Nominees Limited. Wealth Club Nominees Ltd will be completing the share subscription documentation on investors’ behalf.

Please refer to the Schedule of Charges for more details on charges (they may vary for different rounds and offers).

All the services Wealth Club and, where applicable, its subsidiaries provide are governed by the Terms and Conditions of the Wealth Club Services.

Our view

It is encouraging that the Company has secured an offer of significant funding at a 44% uplift in valuation, in our view. Management believes this capital, if raised as expected, should be sufficient to fund the Company through to profit and exit – not guaranteed. 

Since the last funding round in 2023, the Company has completed development of its technology. Although achieving final clinical milestones has taken longer than anticipated, the Company is moving towards CE mark submission, having completed its final study, ANODE03. Once the mark is awarded – not guaranteed – Glyconics should be able to begin to commercialise the technology. 

Funds from the Series A round should enable the Company to rapidly scale and commercialise. With other products in the pipeline and an opportunity to monetise the data the company is aggregating, the wider opportunity for Glyconics could potentially be significant.

In our view, the current round, at a discount to the Series A, gives existing investors an opportunity to reduce dilution and continue to support the Company – not guaranteed. We consider this to be a compelling, albeit high-risk, EIS investment opportunity although as usual you should form your own view.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.