Thursday, September 28th 2023

Oxford Cannabinoid Technologies PLC

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With significant backing from a FTSE100 “Giant” are Oxford Cannabinoid Technologies about to light up?


“…With a clear roadmap to achieving regulatory approval for a well defined product, investors seeking access to a biotech sector might want to take a look at OCTP at its current low price…”


Biotech new starts have faced harsh market headwinds for some time now, but Oxford Cannabinoid Technologies (LON:OCTP) has continued to work towards defining a schedule for Phase 1 clinical trials for its emerging treatments based on cannabinoid derivatives.

OCTP is focused on cannabinoid-based pharmaceuticals rather than commercial medical cannabis products, aiming to develop prescription medicines that have passed rigorous clinical trials set by regulators. By doing so the company aims to secure market exclusivity for effective treatments for those suffering chronic pain, thereby following the path of another UK-based cannabis biochemistry company, GW Pharmaceuticals, sold to US drugmaker Jazz Pharmaceuticals last year in a multi-billon deal. As OCTP puts it, in ‘a cannabis market where unlicensed medicines remain abundant and unproven … it is only the development of cannabinoid-based medicines through existing channels of licensed drug development that allows the medical community to prescribe drugs with confidence and in volume which gives us patent protection and market exclusivity.’

The company was founded five years ago when private investment firm Kingsley Capital Partners sunk £10m into an Oxford University research programme studying possibilities for cannabinoid use in pharmaceuticals. 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 12-year-old 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 countryt. 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.

Earlier this year OCTP appointed a Scientific Advisory Board to provide technical guidance on the company’s strategy and organisation of clinical trials. The Board, which will work closely with the company’s Chief Scientific Officer, Dr Valentino Parravicini, includes Professor Robert Dworkin, Professor in the departments of Anesthesiology and Perioperative Medicine, Neurology, and Psychiatry at the University of Rochester Medical Center School of Medicine and Dentistry, New York State; Dr Giorgio Lambru, a Consultant Neurologist at Guy’s & St Thomas’ NHS Foundation Trust, London, and Honorary Senior Lecturer at King’s College London; and Professor Anthony Dickenson, Emeritus Professor of Neuropharmacology at University College, London.

OCTP’s medicines will target 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. The company 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 such 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.

OCTP’s research focuses on medicines that act on the body’s endocannabinoid system (ECS), which helps regulate many physiological functions, including pain, mood, memory, sleep, appetite, and immunity to cancer and infective agents. There is increasing evidence of the exceptional capacity of cannabinoids to map on to ECS receptors in the brain and peripheral nervous system: OCTP wants to develop cannabis-based compounds that target such receptors more precisely than the ingestion of cannabis flower and extracts allows, and blend natural cannabinoids with cannabinoid derivatives and other chemical entities to design a portfolio of drugs tailored for different ailments.

The commercial incentive is the immense potential for cannabinoid treatments verified through a robust regulatory process. Unlike natural cannabis treatments in which the plant is simply ingested, medically-proven cannabinoid derivatives qualify for patent protection, licensed drugmakers qualifying for a period of market exclusivity of up to 20 years in recognition of their investment. Prescribed cannabis-based pharmaceutical products thereby transcend the battle for legitimacy that continues to frustrate the wider medical cannabis industry. OCTP wants to follow the example of GW Pharmaceuticals, which generates more than $500m in annual sales 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. Speaking to Investors’ Chronicle Mr Mahapatra said ‘We think of ourselves as the next GW Pharmaceuticals … GW, like us, are one of the few firms in the cannabis space that actually requires no real progression of cannabis law in order for its business model to succeed … That is because we are using these already pre-existing channels of drug development, clinical trials and regulatory approval … to develop our products.’

Progress towards Phase 1 clinical trials


OCTP has made steady progress towards implementing the roadmap it set out on joining the LSE. Most of the net proceeds of £14.82m raised on listing are being used for the pre-clinical development and initial clinical trial of its flagship drug candidate, OCT461201, which targets neuropathic and visceral pain caused by nerve damage or disease, and which the company is aiming to commercialise by 2027.

Rather than building an extensive in-house team the company has a partnership model, paying for research on a ‘fee for service’ basis that allows it to retain all intellectual property. Since IPO OCTP has entered an 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 their regulatory authorities. A service agreement with drug discovery and development company Evotec entered the OCT461201 compound into Evotec’s INDiGO programme, an integrated drug development process designed to expedite the process of bringing early drug candidates to clinical trials. The programme is developing manufacturing, safety, and toxicology packages for submission to the UK and US regulators. Evotec will also manufacture and formulate OCT461201 for use in clinical studies.

This year analysis of pre-clinical data indicated that OCT461201 is effective for the treatment of small fibre neuropathies, which can reduce pain within models of chemotherapy-induced peripheral neuropathy (CIPN). OCTP is pursuing a clinical development programme designed to help patients with small fibre neuropathies, such as cancer patients suffering from nerve damage caused by treatment with chemotherapy, and potentially those suffering from diabetic neuropathy. There are currently no approved therapies for CIPN, which is presently treated with drugs that can have serious side effects. The market for an effective CIPN treatment is forecast to reach $2.37bn in the next five years, which OCTP believes could grow to more than $7bn once combined with other small fibre neuropathies. The company is also developing OCT461201 for the visceral pain suffered by patients experiencing irritable bowel syndrome.

OCTP reported a significant breakthrough last month, entering into a master service agreement and work order with clinical research organisation Simbec Research to work towards a first-in-human Phase 1 clinical trial for OCT461201. The trial, designed to demonstrate the safety and tolerability of the product, is scheduled to begin in Q1 2023, following regulatory submission to the UK Medicines & Healthcare products Regulatory Agency (MHRA), with interim results expected by the end of March 2023 and the full report expected in Q2 2023.

OCTP is also progressing a second lead candidate, OCT130401, a drug-device combination that delivers phytocannabinoids to patients suffering from trigeminal neuralgia (TN) with a pressurised metered-dose inhaler. TN causes debilitating and excruciating pain, can take hold with unexpected speed, and is difficult to treat with conventional systemic medicines. Some 10,000 and 15,000 new cases are diagnosed in the US each year, and OCTP estimates there are between 60,000 and 95,000 people with the condition in the UK. Phase 1 clinical trials are due in Q4 2022. OCTP is currently selecting a partner to expedite the route to first in human trials while ensuring quality and patients’ safeguarding, and has entered into a five-year Master Service Agreement with Benuvia Manufacturing for the manufacture of the drug-device combination for use in the trials.

OCTP continues to research other compounds. On going public the company had a library of 93 proprietary cannabinoid derivatives, expanded last autumn through an exclusive license agreement with Canopy Growth Corporation for their entire pharmaceutical cannabinoid derivative library, including 335 derivatives and intellectual property rights including 14 patent families and associated research data. OCTP has started multiple screening programmes for drug-like compounds able to target multiple therapeutic areas, including pain, neurology, immune-inflammation and oncology. The aim is to develop one programme to the lead compound stage and another to drug candidate selection (ready for pre-clinical development) by the end of 2022.

Final results for the eleven month period ended 30 April 2022, published last month, reported the company was debt-free with cash reserves of approximately £9.2m. According to OCTP’s most recent trading update total costs before tax credits were approximately £5.6m reflecting administrative costs and an approximate £2.9m investment in research and development. The company expects its current funds to last till ‘March/April 2023’. OCTP has won significant backing from FTSE 100 British multinational tobacco company Imperial Brands Ventures Limited, which has taken a 9pc strategic holding in the company to its second largest shareholder behind Mr Mahapatra’s Kingsley Capital Partners. The move reflects the growing interest among the tobacco giants in medicinal cannabis.



Since going public OCTP has had to cope with extremely challenging market conditions. Caught up in the turn against biotech stocks – part of the wider move against speculative tech – the company’s share price has fallen from its IPO price of 5p to just under 1p, taking its market cap to £8.61m at the time of writing. The Nasdaq Biotechnology index has fallen almost a third from the all-time high it touched 12 months ago, the sell-off in the sector in part due to dumping by ‘tourist investors’ hunting for returns during the early stages of the pandemic. 

But some asset managers are positioning their funds for a turning of the tide, considering that prices have fallen too far relative to firms’ drug development prospects and their remaining cash levels. Many good companies have been sold off along with the bad. Speaking to the Financial Times, Andrew Clifford, CEO of Platinum Asset Management said ‘It’s the one area where there’s been complete and utter capitulation.’ The firm is launching an EU-regulated version of a health sciences fund it already manages, as it tries to profit from the sell-off. Cedric Vuignier, head of liquid alternative managed funds at SYZ Capital says the company is ‘positive on biotech’, and has been adding to its positions in funds trading the sector. Chief investment officer Kevin Russell said there had been ‘very little distinguishing between stocks’ in the industry, adding there is capacity for more than $1tn of deals in the sector as pharma companies try to build their drug pipeline. Blackstone, Carlyle and Apollo have all taken significant stakes in biotech, reflecting the sector’s mainstreaming as an asset class.

In its annual report OCTP acknowledged that ‘the market has not yet fully recognised the true value of the Group. Whilst we appreciate that worldwide economic and political events are impacting the whole of our sector at the moment, we also understand and share the frustrations regarding share price performance since IPO in May 2021’. The company began trading on the OTC QB late last year to build name recognition in the US, and has appointed Axis Capital Markets as new brokers. 

Times continue to be tough for biotech stocks, but OCTP continues to progress its two lead programmes towards first-in-human Phase 1 clinical trials scheduled later this year and next. 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 commercial reward can be very great. With a clear roadmap to achieving regulatory approval for a well defined product, investors seeking access to a biotech sector that may again be on the market’s radar might want to take a look at OCTP at its current low price. Prospective investors should also listen to a TMS interview earlier this month with Dr Parravicini, the company’s Chief Scientific Officer.


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