Clinical 2023 in prospect
Oxford Cannabinoid Technologies (OCT) develops non-opioid pain pharmaceuticals. After further, positive preclinical research, there are two lead products heading for clinical development. The first is OCT461201 (“201”), an oral product to relieve peripheral nerve pain caused by cancer chemotherapy (CIPN). The second is OCT130401 (“401”), a fast relief inhaled therapy for a sudden onset, facial-pain condition (trigeminal neuralgia, or TN). Both are late preclinical with the CIPN lead (201) due to enter Phase 1 in early 2023 and the TN formulation (401) starting Phase 1 by late 2022. Earlier stage discovery projects utilise a library of 335 cannabinoid compounds licensed from Canopy Growth and developed using other contractors.
Currently, 28% of cancer patients undergo chemotherapy and surveys indicate that about 60% of these, so about a quarter of a million people, annually in the US, suffer from CIPN. Of these, 30% still have symptoms after a year. CIPN is not well treated. OCT estimates this market to be worth US$2.4bln by 2027. Development of 201 is contracted to Evotec under its INDiGO fully integrated development program. The total cost will be £2.6mln. This gives us a high level of confidence that, assuming no scientific red flags, the Phase 1 UK clinical trial will start on schedule.
Although TN can be effectively and cheaply treated by systemic, chronic therapy, the drugs used are old anti-epilepsy products with major side effects. OCT's proposed aerosol fast delivery of a mix of active cannabis molecules could give rapid, immediate relief.
Pharmaceuticals derived from cannabinoids
The 30 April 2022 cash balance was £9.2mln (the year-end changed from 31 May to 30 April so FY22 had 11-months). Management estimates that cash will fund operations until March or April 2023. Hence, further funding, probably by late 2022 in our view, will be needed. Management has indicated that if funding is not available, one of the two lead projects will be delayed to give cash till late 2023.
OCT is now a virtual company, keeping costs down with no offices or labs. R&D costs in FY22 were £2.9mln, up from £0.4mln in pre-IPO FY21. Admin rose to £2.3mln, from £1.5mln. There is no debt. Costs will rise over FY23 as clinical development is initiated. FY22 operating cash outflow was £5.4mln.
On the balance sheet, an R&D tax credit of £0.93mln has been claimed. OCT also had £1.4mln of prepayments and accruals in trade receivables; trade payables had £1.8mln of payables and £0.2mln of accruals and tax.
The market capitalisation of about £7mln reflects the weak market for earlier-stage biotechnology stocks and the need for further funding. In our view, this is an interesting opportunity since the major lead project, 201, is heading for clinical development in early 2023 with safety and data in spring 2023. 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. TN offers an orphan pain therapy market. The shares were admitted to the US OTC QB on 1 December 2021 under ticker "OCTHF".
Investment conclusion
Year end Apr 30 · 2020 · 2021
Operating profit (£,000s) · (3,346) · (5,503)
Net Cash · 14,630.0 · 9,266.0
Exhibit 1 shows the current pain pipeline with Phase 1 trials starting in late 2022 for 401 and early 2023 for 201. These will be in healthy individuals to assess dose, safety and behaviour of the drug substance in the body.
Lead projects
Exhibit 1 - OCT Pipeline July 2022
Source: OCT
401 was originally developed by Pfizer and licensed by OCT from AskAt. It activates the Cannabinoid Receptor 2 (CB2). CB2 is found on brain immune cells but is mainly found outside the brain. 201 has no psychoactive effects. There is independent preclinical literature evidence (Lin et al 2022) that CB2 activation can overcome some toxic effects of chemotherapy. These cause peripheral nerve sensitisation and lower pain thresholds.
Exhibit 2 shows rat data and indicates a possible human dose of 3mg/kg according to OCT.
Exhibit 2 - 201 preclinical
Source: OCT
The baseline is the untreated rat. The vehicle means the rat had paclitaxel chemotherapy, so it is very sensitive to heat or pressure with a fast pain response. Pregabalin (Lyrica) is an anti-epileptic drug indicated for peripheral and central neuropathic pain — in this experiment it is given at a very high dose.
This is a mix of two synthetic cannabis molecules (a standard pharmaceutical approach). The mix is THC (psychoactive) and CBD (non-psychoactive) in a 1:1 ratio. This ratio is like Sativex (nabiximols, Jazz) for spasticity relief in multiple sclerosis, but Sativex is an oral-mucosal spray with slow drug delivery. 401 will be delivered to the deep lung by an off-the-shelf, metered-dose, pressurised inhaler to give fast absorption. This could give fast pain relief from the sudden onset, stabbing pain of TN. A Phase 2 could start in 2023.
Exhibit 3 - 401
Source: OCT
There might be up to 64,000 TN cases in the US based on a prevalence of 1-2 per 10,000. Current therapy is 60-80% effective but requires chronic dosing of carbamazepine, an old epilepsy drug with side effects.