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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU) 596/2014 WHICH FORMS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK MAR"). IN ADDITION, MARKET SOUNDINGS (AS DEFINED IN UK MAR) WERE TAKEN IN RESPECT OF CERTAIN OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION, AS PERMITTED BY UK MAR. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.

CERTAIN OF THE CAPITALISED TERMS USED IN THIS ANNOUNCEMENT, INCLUDING CAPITALISED ABBREVIATIONS, CAN BE FOUND AT THE END OF THIS ANNOUNCEMENT.

Oxford Cannabinoid Technologies Holdings plc

("OCTP" or the "Company")

Subscriptions raising £640,000

Proposed investment led by Cantheon Capital LLC

Comprising gross proceeds of up to £1.205m

and

Proposed Capital Reorganisation

Oxford Cannabinoid Technologies Holdings plc (LSE: OCTP), the biotech company developing prescription cannabinoid medicines, announces conditional Subscriptions for new Ordinary Shares of 0.1p each at a price of 0.5 pence per share ("Issue Price"), to raise gross proceeds of £640,000 from existing Shareholders and new investors (the "Subscriptions").

The Company is also pleased to announce that it has entered into a term sheet for a convertible loan note ("CLN") with Cantheon Capital LLC ("Cantheon"), existing OCTP Shareholders and OCTP directors, to raise up to £565,000 on execution of a binding agreement and subject to certain conditions. Cantheon, a fund focused on listed biotech stocks with near term catalysts, will invest an aggregate amount of £450,000 (payable in two equal tranches) to fund OCTP's Phase I clinical trial for OCT130401, its second programme focussing on the circa £1.8bn Trigeminal Neuralgia market, which is anticipated to commence in Q2 2024 in Australia with potential for a further investment of circa £925,000 as part of OCT130401's Phase II trial with existing investors and OCTP directors contributing an additional £115,000. Participation by the directors in the CLN would constitute a related party transaction and the Company will accordingly comply with the requirements of DTR7.3 at the appropriate time. The term sheet is non-legally binding and will be replaced by a binding agreement in due course.

(Together the Subscriptions and the proposed CLN are "the Fundraise or Fundraising"). The Fundraise comprises gross proceeds of up to £1.205m (approximately £1.15m net of expenses) and is subject to a reorganisation of its share capital and subsequent admission to trading, and in relation to the CLN, the entering into of a binding agreement and the Company achieving certain operational milestones as well as Shareholder approval at a general meeting, details of which will be announced in due course.

CLN

CLN investors will invest up to £565,000 in two equal tranches by way of a convertible loan note (the "Convertible Notes"). The tranches of the investment will be triggered by two operational events in connection with the proposed trial, the first being payment by the Company of the first clinical trial commencement invoice and the second being payment of the invoice related to the first patient enrolments. 

The Convertible Notes will be at an interest rate of 8 per cent paid annually in cash in arrears, will each be for a term of 12 months, and will only be convertible in a maximum of two tranches per investor. The investment is conditional on receiving Shareholder approval, entering into a binding agreement, and on the Company commencing its proposed Phase I trial within 90 days.

The conversion price shall be the higher of the Issue Price and a price equal to the volume weighted average price of the Company's Ordinary Shares over the previous 10 trading days, less a discount of 10 per cent.

Capital Reorganisation

In order to facilitate the Fundraising, the Company also announces that it intends to move forward with the reorganisation of its share capital, as authorised by Shareholders at the Company's Annual General Meeting held on 28 September 2023, with the subdivision of its Existing Ordinary Shares of £0.01 each into Ordinary Shares of 0.1p each. The total issued ordinary share capital of the Company will remain the same following the Reorganisation but prior to the completion of the Subscriptions, being 960,415,644 Ordinary Shares.   

Key Features of the Fundraising

·           Subscription to raise £640k through the issue of 128,000,000 new Ordinary Shares (the "Subscription Shares") at 0.5 pence per share with various existing shareholders and new institutional investors.

·           Term sheet in respect of a Convertible Loan Note to raise up to £565,000, with a commitment of £450,000 from healthcare sector specialist investor Cantheon Capital LLC.

·           The issue price of 0.5 pence per New Ordinary Share represents a 31.5 per cent. discount to the closing middle market price of 0.73 pence per Ordinary Share on 29 January 2024, the last business day prior to the announcement of the Fundraising.

·           Subject to agreeing a timetable with the FCA and the London Stock Exchange, it is anticipated that the Subscription Shares, representing approximately 13.3 per cent. of the Company's existing issued share capital, will be admitted to the Official List and to trading on the Main Market on or around 20 February 2024.

·           No prospectus is required, in respect of the Subscription, as the Company is in compliance with Prospectus Regulation Rule 1.2.4, which prohibits the admission of more than 20 per cent. of the number of securities already admitted to trading on the Main Market of the London Stock Exchange without a Prospectus

·           The CLN Investors, including Cantheon, have agreed that any Ordinary Shares to be issued to them under the CLN may be subject to a delayed admission process whereby admission will not occur until such time as the Company publishes a Prospectus in relation to the issue of up to a maximum of 113,000,000 such new Ordinary Shares in order to enable those shares to be admitted to the Official List and to trading on the Main Market of the London Stock Exchange in accordance with Listing Rule 14.3.4. 

Use of proceeds

The directors anticipate that the net proceeds of the Fundraising, being up to approximately £1.15 million, will enable the Company to advance its second programme, OCT130401, a drug/device combination targeting Trigeminal Neuralgia ("TN"), into Phase I clinical trials and begin the process of opening investigational new drug applications ("INDs") for its lead programme, OCT461201, and for OCT130401, with the Food and Drug Administration ("FDA") in the United States, as well as providing general working capital.

The Company has already completed the administrative steps required to conduct trials in Australia, including incorporating a wholly owned subsidiary OCT Victoria PTY Ltd. It is also in advanced discussions with Contract Research Organisation ("CRO") partners which it hopes will conclude in the very near future. A further announcement on the appointment of the Company's preferred CRO will follow in due course.

Clarissa Sowemimo-Coker, Chief Executive Officer of OCTP, said:

"Commencing Phase I Clinical Trials for OCT130401, OCTP's second programme focussing on the Trigeminal Neuralgia market, as well as starting the process of opening INDs for OCT461201 and OCT130401 are significant milestones for investors which we aim to achieve in relatively compressed timelines.

We are also very pleased to announce that Cantheon has selected OCTP as a growth stock in which it wishes to play a significant role as a cornerstone investor. 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."

William Cronin, Partner of Cantheon Capital LLC, said:

"OCTP meets all the criteria Cantheon looks for when evaluating investment opportunities in mid-stage biotechs. Their development programme using a unique inhaled synthetic phytocannabinoid treatment modality to address a significant unmet need combined with their outstanding management team gave us the confidence needed to move forward with this unique investment opportunity. We look forward to this becoming a long-term partnership where we hope to help OCT130401 and potentially other OCTP pipeline assets through the development and commercialisation process."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 (which forms part of domestic UK law pursuant to the European Union (Withdrawal) Act 2018).

The Directors of the Company accept responsibility for the content of this announcement.

Enquiries:

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identi?ed by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect", ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements re?ect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.

1.     INTRODUCTION

The Company announces that it has entered into conditional Subscriptions to raise £640,000 (before anticipated expenses). The Subscriptions are from various existing and new Shareholders and institutional investors.

The issue price of 0.5 pence per new Ordinary Share represents a 31.5 per cent. discount to the closing middle market price of 0.73 pence per Existing Ordinary Share on 29 January 2024, being the last Business Day prior to the announcement of the Fundraising.

The issue of the 128,000,000 Subscription Shares is conditional on Admission and completion of the Reorganisation.  

Subject to agreeing a timetable with the FCA and the London Stock Exchange, it is anticipated that the Subscription Shares, representing approximately 13.3 per cent. of the Company's existing issued share capital, will be admitted to the Official List and to trading on the Main Market at 8:00 a.m. on or around 20 February 2024.

2.     BACKGROUND TO AND REASONS FOR THE FUNDRAISING

OCTP is a biotech business developing prescription cannabinoid medicines, targeting the U$ multi-billion global pain market.

As previously announced, OCTP currently has a portfolio of four drug development programmes. Its lead compound, OCT461201, will initially target neuropathic and visceral pain (including irritable bowel syndrome ("IBS") and chemotherapy induced peripheral neuropathy ("CIPN"). The global market for CIPN alone is currently forecast to reach US$1.17bn by 2028. Its second programme, OCT130401 is developing synthetic phytocannabinoids in combination with a medical device for the effective, safe and non-addictive treatment of chronic and severe pain conditions.

The initial target for OCT130401 is trigeminal neuralgia ("TN"). TN is a chronic pain condition that causes an excruciating, stabbing, electric shock-like facial pain. It has a fast and unexpected onset and because of this has been difficult to treat. Each episode may only last a few seconds, but some people will suffer multiple (up to 100) episodes during one day. TN is on the rise with between approximately 10,000 and 15,000 new cases diagnosed each year. The directors of OCTP estimate that there are currently over 65,000 people living with the condition in the UK. TN's current market size is estimated to be £1.8bn with a CAGR of 6.1%.

The phytocannabinoids ("pCBs") will be delivered to the lungs via inhalation using a simple pressurised metered dose inhaler ("pMDI") similar to an asthma inhaler. This alternative route of administration bypasses issues associated with oral delivery of cannabinoids (e.g., onset time, poor bioavailability and high first-pass metabolism). Fast onset of the medicine is particularly important for indications where the pain is sudden and severe, as is the case with TN. The low-dosage administration is aimed at achieving a therapeutic effect while controlling side effects and managing the risk of abuse. pMDIs have a long history of use, they take into account the human factor to optimise compliance and have a straightforward regulatory pathway. Doctors and patients alike are familiar with the device and this, together with an easy to carry and easy to use design, is expected to facilitate uptake and compliance.

Preclinical work on OCT130401 is complete and this programme is now ready to enter Phase I clinical trials. Funding those trials, along with the opening of INDs with the FDA, is the main purpose of this Fundraise.

3.     USE OF PROCEEDS

It is anticipated that the net proceeds of the Fundraise, are expected to be up to approximately £1.15 million. The proceeds of the Fundraise will enable the Company to advance the development of OCT130401 by commencing a Phase I clinical trial, as well as funding the opening of INDs with the FDA in the United States for both OCT461201 and OCT130401. The net proceeds will also provide general working capital for the Company.

4.     CURRENT TRADING

As stated in the Company's interim results released on 30 January 2024, trading for the six month period to 31 October 2023 remains in line with market expectations.  Cash at period end was £1.1m, also in line with expectations, and the Company continues to control its costs carefully. Completion of the Company's first single-ascending-dose Phase I clinical trial was announced in October 2023, also in line with market expectations.

5.     THE FUNDRAISING

As mentioned above, the Fundraising comprises the Subscriptions and the proposed CLN.

The Subscriptions are for new Ordinary Shares of 0.1p each at a price of 0.5 pence per share, to raise gross proceeds of £640,000 from existing Shareholders and new investors (the "Subscriptions").

The CLN investors will invest up to £565,000 in two equal tranches by way of a convertible loan note (the "Convertible Notes"). The tranches of the investment will be triggered by two operational events in connection with the proposed trial, the first being payment by the Company of the first clinical trial commencement invoice and the second being payment of the invoice related to the first patient enrolments. 

The Convertible Notes will be at an interest rate of 8 per cent paid annually in cash in arrears, will each be for a term of 12 months, and will only be convertible in a maximum of two tranches per investor. The investment is conditional on receiving Shareholder approval, entering into a binding agreement, and on the Company commencing its proposed Phase I trial within 90 days.

The conversion price shall be the higher of the Issue Price and a price equal to the volume weighted average price of the Company's Ordinary Shares over the previous 10 trading days, less a discount of 10 per cent.   

6.     THE CAPITAL REORGANISATION

Over the past few months, the Company's share price has fluctuated around 1 penny, being the nominal value per Existing Ordinary Share. The Company is not permitted by law to issue shares below their nominal value. Therefore, at the AGM, the directors of the Company sought, and were granted, Shareholders approval, inter alia, to reorganise the Company's share capital so as to provide the Company with flexibility to issue new Ordinary Shares at a price which is required by law, that is no less than the nominal value of such new Ordinary Share.

At its AGM, the Company proposed a sub-division of each of its Existing Ordinary Shares into 2 new shares; the first being a redenominated ordinary share of 0.1p each and the second being a deferred share of 0.9p each. The Company also proposed an amendment to its Articles in order to set out the rights and restrictions attaching to the Deferred Shares. The Directors consider the Deferred Shares, to be of no economic value and they will not be admitted to the Official List nor to trading on the Main Market.

The Company is now proposing to approach the London Stock Exchange and the FCA with a view to actioning the Reorganisation and setting a definitive timetable. The Company currently has 960,415,644 Existing Ordinary Shares in issue with a nominal value of £0.01 each. The Reorganisation approved by Shareholders will consist of the following steps:

i. the amendment of the Articles to set out the rights and restrictions attaching to the Deferred Shares; and

ii. the sub-division of each Existing Ordinary Share into 2 new shares - a Redenominated Ordinary Share of 0.1p and a Deferred Share of 0.9p.

The Company will need to amend its Articles to set out the rights and restrictions attaching to the Deferred Shares. The Deferred Shares will not be admitted to the Official List or to trading on the Main Market (or any other investment exchange). The Deferred Shares will have limited rights and will be subject to the restrictions, as set out in the Company's Articles, as amended by special resolution at the Annual General Meeting and as summarised below.

The Deferred Shares

The Deferred Shares will not be transferable. The holders of the Deferred Shares shall not, by virtue or in respect of their holdings of Deferred Shares, have the right to receive notice of any general meeting of the Company or the right to attend, speak or vote at any such general meeting. The Deferred Shares will not entitle their holders to receive any dividend or other distribution. The Deferred Shares will on a return of assets in a winding up entitle the holders only to the repayment of £1.00 for the entire class of Deferred Shares. The Company will have irrevocable authority at any time to appoint any person to execute on behalf of the holders of the Deferred Shares a transfer thereof and/or an agreement to the transfer of the same to such persons as the Company may determine or as the Company determines as custodian thereof, without making any payment to the holders thereof, and/or consent to cancel the same (in accordance with the provisions of the Act) without making any payment to or obtaining the sanction of the holders thereof. The Company may, at its option at any time, purchase all or any of the Deferred Shares then in issue, at a price not exceeding £1.00 for each aggregate holding of Deferred Shares so purchased. The directors of the Company consider the Deferred Shares, so created, to be of no economic value and they will not be admitted to the Official List nor to trading on the Main Market.

Reorganisation Q&A

1.   Why is a reorganisation necessary: In accordance with the Companies Act, the Company cannot issue shares below their current nominal value of one penny.

2.   Trading of New Ordinary Shares: The newly issued 0.1p Ordinary Shares will be traded and retain the same rights as the pre-existing 1p Ordinary Shares.

3.   Deferred Shares Trading: Deferred Shares will not be admitted to trading on any market.

4.   Certificates for Deferred Shares: No share certificates will be issued for Deferred Shares.

5.   Rights with 0.1p Ordinary Shares: Holders of the new 0.1p Ordinary Shares have the same rights as the original 1p Ordinary Shares, including the rights to attend meetings, vote, and receive dividends.

6.   Deferred Shareholder Rights: Deferred Shares confer minimal rights and hold nominal value in a winding-up or dissolution scenario.

7.   Impact on Existing Shares and Dilution: The Reorganisation will not affect the number of Existing Ordinary Shares. The Deferred Shares created have no value, so they do not affect the value or voting power of existing shares. However, on Admission of the Subscription Shares, the Company will have 1,088,415,644 Ordinary Shares in issue, each with one voting right. There are no shares held in treasury. Therefore, the Company's total number of Ordinary Shares and voting rights is expected to be 1,088,415,644 but this figure will be confirmed on Admission and can then be used by Shareholders from Admission as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.. 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS*

\* The expected timetable remains subject to any amendments that the London Stock Exchange or the FCA may have.

If any of the details contained in the timetable above should change, the revised times and dates will be notified to Shareholders by means of an announcement through a Regulatory Information Service.

All references to time and dates in this announcement are to time and dates in London.

KEY STATISTICS

DEFINITIONS

The following de?nitions apply throughout this announcement unless the context otherwise requires: