(Alliance News) - Oxford Cannabinoid Technologies Holdings PLC on Tuesday announced narrowing losses and a new government tax credit, as shares fell following a fundraise of GBP1.2 million for its latest programme trials.

Oxford Cannabinoid is an Oxford-based pharmaceutical company developing prescription cannabinoid medicines.

The company announced the raising of GBP646,000 through the issue of 128.0 million new shares at a price of 0.5p each.

Shares in the company were down 20% at 0.58 pence each in London on Tuesday morning.

Meanwhile, Oxford Cannabinoid posted a pretax loss GBP2.4 million for the six months ended October 31, narrowed from GBP4.5 million a year prior. The company remains pre-revenue generating, but said it is on target to receive regulatory approval in 2027.

GBP1.1 million was spent on phase I single ascending dose trials for Oxford Cannabinoid's lead programme OCT461201, which aims to treat chemotherapy-induced peripheral neuropathy. In October, the company announced the successful completion of the phase I trials for OCT461201.

Chief Executive Officer Clarissa Sowemimo-Coker said: "It's been a hugely exciting period of activity, and we are delighted with the progress that has been made. In particular, successfully completing our first clinical trial is a huge milestone for the company and the whole team is rightly proud of that achievement."

On Tuesday, the company also received confirmation of a GBP1.3 million research and development tax credit from HRMC, relating to work carried out on four drug development programmes over the financial year ended April 30. Oxford Cannabinoid said that R&D credits are an essential part of its strategy during products' pre-clinical and clinical stages, allowing it to "optimise its cash runway through continuous reinvestment in its programmes".

Commenting on the tax credits, Sowemimo-Coker said: "The tax credit is almost double the size of that which was remitted to the company by HMRC in the 2022 financial year, reflecting the significantly enhanced investment in research and development that we have made over the last 12 months and the tremendous progress the company has made over the period."

As of October, the company had a cash balance of GBP1.1 million, with a runway extending to the end of the first quarter of 2024. Oxford Cannabinoid said that its programme spend and administrative expenses remain "in line with or below budgeted levels".

Oxford Cannabinoid has also entered into a term sheet for a convertible loan note with Cantheon Capital LLC, as well as existing shareholders and directors, to raise a total of GBP565,000. Cantheon, an investor in early- and mid-stage biotechnology companies, will provide GBP450,000, and the total proceeds will be used to fund phase I trials of Oxford Cannabinoid's trigeminal neuralgia treatment OCT130401.

Sowemimo-Coker said: "Cantheon has an established track record of investments in mid-stage specialist biotech businesses, providing capital funding and scientific advice. This announcement represents an important vote of confidence in the company and its pipeline, and a powerful endorsement of the progress the business is making. We are delighted to welcome Cantheon on board and look forward to working with them."

Following approval at the company's annual general meeting in September, Oxford Cannabinoids has elected to separate each of its existing shares into two new shares, at 0.1p and 0.9p each, to ensure that it does not issue new shares below their nominal value. The company plans to approach the London Stock Exchange and Financial Conduct Authority with a view to enacting the reorganisation.

By Hugh Cameron, Alliance News reporter

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