OCT enters clinical development with 201
Oxford Cannabinoid Technologies (OCT) develops a range of cannabinoid-derived pharmaceuticals. The key news is that the Phase 1 dose and safety study of its lead indication OCT461201 (“201”) with up to 32 volunteers has started.
The phase I should be followed by a phase II in patients with established chemotherapy-induced peripheral neuropathy (CIPN): nerve damage and limb pain caused by toxic cancer chemotherapy typically pins and needles in fingers and toes. The phase II could start in Q1 CY2024 if funding allows. OCT estimate the CIPN market at nearly $1.7bln.
A further major market in Inflammatory Bowel Disease is possible. This will require separate phase II studies.
OCT has also announced interesting plans for an early-stage research project to develop an oral immune-modulating oncology product. The project originates from a synthetic cannabinoid compound in the licensed Canopy-Growth library. Approved immuno-oncology agents are expensive, involve injected/infused antibodies, and target solid cancers. The company's initial research-stage data has shown the potential of the compound. An oral immuno-oncology agent, as OCT envisages, could be taken in pill form at home, greatly increasing its commercial potential.
OCT has two other projects: OCT130401 (“401”) is aimed at the rapid relief of trigeminal neuralgia (sudden facial nerve pain). It is a cannabinoid mixture to be given by a metered inhaler. Programme 3 is another pain project. It is derived, like the new oncology Programme 4, from OCT's combined proprietary and in-licensed library of 475 molecules.
Phase I in CIPN underway plus new oncology research project
Full FY23 results are expected in August, but management has stated that OCT has cash until Q1 FY2024 (mid-calendar 2024). The H1 FY23 cash balance (31 October 2022) was £4.9mln, down from £9.2mln on 30 April 2022. OCT expected a tax credit cash payment of about £750k in H2FY23. Expenditure will have risen with the 201 phase I, so we anticipate that further funding will be needed in H2 CY2023 to enable the phase II study of 201 to proceed in H1 CY2024. OCT does not plan to allocate additional funds beyond its current cash reserves for the development of its other programmes beyond 201.
The market capitalisation of about £8.5mln reflects the current market for earlier-stage biotechnology stocks and the need for further funding. In our view, OCT remains an interesting opportunity since the major lead project, 201, is now in phase I, a key milestone. The indication, CIPN, has no effective current treatment. With clinical data, this novel product aiming for an underserved and accessible market could be an attractive partnering opportunity.
Investment conclusion
Year end Apr 30 · 2021 · 2022
Operating profit (£,000s) · (3,346) · (5,503)
Net Cash · 14,630.0 · 9,266.0
OCT's lead drug 201, Programme 1, is a first-in-class cannabinoid receptor 2 (CB2) agonist for the treatment of post-operative pain. In the phase I, the first volunteer has now been dosed making OCT a clinical stage company, a major achievement for any emerging pharma business. The trial will evaluate the safety, tolerability and pharmacokinetics of 201 in healthy volunteers and patients with post-operative pain.
Expanding cannabinoid pipeline
The phase 1 uses a single ascending oral dose (SAD) format. The design is for 4 cohorts of 8 volunteers (32 people) to assess dose and safety. This is a solid basis for further development. However, It is not designed to yield any efficacy information. The trial (ISRCTN39003837) is registered on the ISRCTN database.
The trial, Table 1, has a starting dose of 10mg. Depending on the observed blood levels, the next dose will be either 3x or 5x higher (30mg or 50mg). The rate of dose increase depends on how much drug is absorbed by the body and how it is metabolised and excreted. If high drug blood levels are seen (“high exposure”), the dose will rise 3x. If low blood levels are seen (“low exposure”), a 5x dose increase will be used. This is assessed once each cohort's analytical results are received. This means that the trial will take a few months to run. The highest dose is envisaged as between 270mg and 450mg. This is a sophisticated study design.
Phase I design
Table 1 - 201 Phase 1 exposure levels
Source: OCT Presentation
The next step currently being planned will be a phase II in patients with established CIPN. These patients will have completed a course of chemotherapy some months previously. However, the chemotherapy will have caused nerve damage that has not resolved. OCT will therefore be able to assess the extent to which 201 relives CIPN. With funding, this trial might start in Q1CY2024. As it should provide some efficacy indications, it could lead to partnering discussions
Potential phase II
OCT has a pipeline of 201 plus three projects, Exhibit 1. OCT130401 (401) is a cannabis mixture delivered by a metered dose inhaler. It is aimed at rapid pain relief of trigeminal neuralgia (TN). Programmes 3 and 4 are in earlier research stages. Programme 4 is the new oncology project.
Pipeline
Exhibit 1 - OCT July 2023 pipeline
Source: OCT Website
CIPN need and market
As shown in Exhibit 2, CIPN is caused by cancer chemotherapy damaging the nerves. Initially 201 will be trialled in phase II in patients who have completed a course of chemotherapy, developed CIPN during it and then found that it has not resolved several months into their recovery. This established CIPN provides a clearer baseline from which to assess efficacy in a patient group with a clear medical need. OCT puts this market at about $1.7bln. With good phase II data, 201 should be an excellent candidate for partnering.
Exhibit 2 - CIPN - nerve damage due to cancer chemotherapy
Source: OCT
Programme 2: 401
The company's second programme OCT130401 (“401”) is a combination of cannabis molecules: synthetic THC (dronabinol (DBN)) and CBD a 1:1 ratio. The mixture is delivered to the deep lung using an off-the-shelf, metered-dose, pressurized inhaler (Exhibit 3) for fast absorption through the lung.
OCT envisages that 401 can provide quick pain relief from the sudden onset of stabbing facial pain in trigeminal neuralgia (TN). Preclinical work has now been completed and the project put on hold to improve cash flow and focus on OCT's lead drug 201.
Exhibit 3 - 401 inhaler
Source: OCT presentation
Programes 3 and 4
OCT is expanding and diversifying its cannabinoid pipeline with programmes 3 & 4 utilising its extensive cannabinoid library. These candidates come from OCT’s cannabinoid library of 475 derivatives (Exhibit 4). The library includes 335 derivatives that the company has exclusive rights to use across THC, CBD and CBG derivatives, as well as 140 cannabinoid molecules through its collaboration with Canopy Growth Corporation (TSX:WEED, NYSE:CGC).
Exhibit 4 - OCT pipeline mix
Source: OCT Investor Presentation
Programme 3 is a novel analgesic for a rare pain condition. The candidate is a dual agonist of CB1 and CB2 receptors, which are part of the endocannabinoid system (ECS) that regulates pain and inflammation. The candidate has demonstrated superior pain relief than THC and fewer adverse effects in preclinical studies. The company has started the safety pharmacology package and is moving towards phase I readiness.
OCT's programme 4 candidate is a novel cannabinoid derivative aimed at treating solid tumours. A possible mode of action in our view is that it might selectively block an endocannabinoid receptor. This receptor is also expressed by immune cells and plays a role in modulating inflammation. Overall, the aim seems to be to lower the natural limitations on the immune response to enable therapies like checkpoint inhibitors to work more effectively. Checkpoint inhibitors are infused antibodies whereas OCT's proposed agent is envisaged as an oral product based on data to date.
Programmes 3 and 4 cannabinoid derivatives will be paused once at pre-clinical and lead stages.
Outlook
While only OCT's lead candidate 201 is will complete phase II this year, the company has managed to get the 401 programme “phase I-ready” and complete a significant amount of early work on Programmes 3 and 4. With the expansion into oncology, OCT has put itself in a strong position to exploit the combined library of compounds.
OCT will present its FY23 results in August 2023. We note that OCT will need further funds to move 201 into phase II, essential for substantial value progression. Funds will also allow 401 and the two research-stage programmes to be moved forward.