Time to have a closer look at Oxford Cannabinoid Technologies ?
“…it’s worth noting that the company’s share price has dipped somewhat in the weeks since it launched, falling from 5p to just under 4.4p. At this price it might be worth getting on board with OCTP now…”
Oxford Cannabinoid Technologies (LON:OCTP), which joined the LSE Main Market last month, raising just under £15m, offers a fresh entry point to the fast evolving cannabis market.
OCT is focused on cannabinoid-based pharmaceuticals rather than commercial medical cannabis products, aiming to develop medicines suitable for prescription – and lucrative market exclusivity – after passing rigorous clinical trials and securing regulatory approval. By doing so it hopes to offer effective treatments for those suffering chronic pain, and follow the path of another UK-based cannabis biochemistry company, GW Pharmaceuticals, sold to US drugmaker Jazz Pharmaceuticals earlier this year for $7.2bn.
OCT is the latest cannabis-related company to go public this year, after the Financial Conduct Authority gave the green light for UK-based medicinal cannabis companies to list on the LSE last autumn. Several have already been covered by TMS, including the Kanabo Group (LSE:KNB), developing products including a vaporiser measuring precise cannabis doses; Love Hemp (AQSE:LIFE), perhaps the UK’s most recognisable high street cannabis product brand; Fast Forward (AIM:FFWD), an investment fund with interests in several cannabis ventures; and Apollon Formularies (AQSE:APOL), researching new medical cannabis treatments.
UK retail investors have poured more than £300m into cannabis stocks this year, seeking a stake in a European market that some forecasts estimate will be worth nearly €14bn within the next five years. Medical cannabis is now legal in more than 40 countries, and the giant US market is gradually opening: medicinal cannabis is already legal in 15 states with the prospect of further liberalisation under the liberal Biden administration.
Seeking effective solutions to alleviate chronic pain
OCTP was founded four years ago when private investment firm Kingsley Capital Partners sunk £10m into an Oxford University research programme studying pharmaceutical uses of cannabinoids. Co-founder and Executive Chairman, Neil Mahapatra, a Kingsley Capital director, sponsored and launched the End our Pain campaign that was instrumental in securing UK government approval for the use of medical cannabis in 2018, highlighting the case of Billy Caldwell, a young epilepsy sufferer whose condition reportedly deteriorated after his supply of cannabis oil – then illegal in Britain – was confiscated when he and his mother re-entered the country at Heathrow airport. The company’s CEO Dr John Lucas has 20 years experience in the pharmaceutical industry, having held senior positions at Cizzle Biotechnology, Boehringer Ingelheim Pharma, Venture Life Group, and Ilika.
OCTP is developing cannabis-based prescription medicines finely calibrated for the relief of inflammatory and autoimmune disorders such as rheumatoid arthritis, systemic sclerosis, fibromyalgia and osteoarthritis, and debilitating neurological and neurodegenerative disorders including multiple sclerosis, Parkinson’s, Alzheimer’s, and epilepsy. It is also researching the potential of cannabinoids to alleviate cancer symptoms, and even treat their underlying causes.
Although there are an estimated 1.5 billion chronic pain sufferers worldwide – more people suffer from chronic pain than cancer, heart disease and diabetes combined – pain treatments are limited, consisting primarily of opioids and anti-inflammatory drugs. Many patients are now dependent on these painkillers, which can have fatal side effects: last year there were more than 60,000 opioid-related deaths in the US in 2020 alone. For many other patients there are no effective pain medications at all.
OCT’s research focuses on medicines that act on the body’s endocannabinoid system (ECS), which plays important roles in many physiological functions, including pain, mood, memory, sleep, appetite, and also the immune response to cancer and infective agents. There is increasing evidence of the exceptional capacity of cannabinoids to map on to ECS receptors found in the brain and peripheral nervous system, and elsewhere in the body. OCT is developing cannabis-based compounds that target these receptors more precisely than the ingestion of cannabis flower and extracts allows, blending natural cannabinoids with cannabinoid derivatives and other chemical entities to design a portfolio of drugs calibrated precisely for different ailments. The company’s research has already developed a proprietary library of nearly a hundred cannabinoid derivatives that can be drawn upon to create safe, non-addictive treatments.
OCT’s commercial incentive is the immense potential for cannabinoid treatments that have gone through a tough regulatory process to access a pain market worth more than £40bn. Unlike natural cannabis treatments that use the plant’s native qualities, effective cannabinoid derivatives qualify for patent protection and regulatory exclusivity: in return for their investment licensed drugmakers qualify for a period of market exclusivity of up to 20 years.
Furthermore, prescribed cannabis-based pharmaceutical products don’t face the same battle for legitimacy that continues to frustrate the wider medical cannabis industry. A report backed by 16 industry bodies published earlier this year called the UK’s medical marijuana sector ‘a mess’. Noting that only three prescriptions have been administered by the NHS since treatments were legalised in 2018, the paper argued the government should make it easier to grow cannabis for medical use, relax restrictions on the extraction of the cannabinoid CBD, and allow general practitioners, not just specialists, to prescribe cannabis.
OCTP hopes to follow the example of GW Pharmaceuticals, which last year sold more than $500m of Epidiolex, its cannabis-derived treatment for childhood epilepsy, the first cannabis-derived medicine to receive US regulatory approval and become available on the NHS. GW also sells its multiple sclerosis treatment Sativex in 29 countries.
A roadmap to regulatory approval
OCTP set out its roadmap in the market update it published on joining the LSE. Most of the net proceeds of £14.82m the company raised on listing – taking its market cap to just below £50m – will be used for the pre-clinical development and first phase clinical trial of its first drug candidate, OCT461201, which targets neuropathic and visceral pain caused by nerve damage or disease. This and a second drug candidate will begin clinical trials in the third quarter of 2022, with a view to the commercialisation of OCT461201 by 2027. OCTP is targeting a market of £1.55bn with its first two drug development programmes, and is working towards the development of a portfolio of drugs able to reach a £20bn market.
Rather than building an extensive in-house team the company follows a partnership model, paying for research on a ‘fee for service’ basis allowing it to retain all intellectual property. OCTP continues its research collaboration with Oxford University, but engages new partners on a case-by-case basis to drive further research and development. A couple of weeks after its IPO the company announced a consultancy agreement with Voisin Consulting, a medical devices, cannabinoids, neurological disorders and addiction consultancy, with which it will evolve its strategies for accessing the UK, US and EU markets, and engaging their regulatory authorities.
A new way in to a complex market
OCTP offers an intriguing new option for the investor seeking access to the UK’s exciting but somewhat confusing cannabis market. The company’s commitment to the long road that must be travelled to secure regulatory approval for cannabis-based prescription treatments make it something of a slow burner, but as the example of GW Pharmaceuticals demonstrates, the eventual commercial reward can be very great. And it’s worth noting that the company’s share price has dipped somewhat in the weeks since it launched, falling from 5p to just under 4.4p. At this price it might be worth getting on board with OCTP now.
To listen to the latest interview from the company with @TMsreach click here.
