LONDON Stock Exchange debutant Oxford Cannabinoid Technologies is aiming to emulate the success of GW Pharmaceuticals.

Its founders Gavin Sathianathan and Neil Mahapatra were two of the UK’s first cannabis entrepreneurs, entering the space in 2015.

It didn’t take long for them to identify GW Pharmaceuticals as the industry’s shining light with its focus on delivering pharmaceutical-grade cannabis medicines to those in need.

And, OCT’s LSE debut, last Friday, marks a significant milestone in achieving that – and becoming a multi-billion pound company.

Filling A Market Gap

OCT co-founder and Executive Chair Mr Mahapatra said: “In 2015 we became active in the market – after being involved in businesses all over the world – and it became very clear that, GW aside, there was a big gap in the market for quality research and companies focussed on developing IP.”

This led to discussions with Oxford University to explore the efficacy of cannabis formulations for a range of pain indications.

It is currently working on four medical cannabis drug streams with the first ones set to go through Phase One clinical trials in 2022 (see below).

With OCT developing cannabis medicines under the pharmaceutical pathway its drugs will have to go through Randomised Controlled Trial’s (RCT) in three phases to understand the safety and efficacy of the medicine before securing approval from the medical regulators.

This will take some six to seven years and over that time it will be returning to the LSE to secure additional capital.

Value Inflexion Points

Mr Mahapatra said: “Each time we pass a trial stage we will go through an inflexion point with the value of the business rising considerably.

“The transition from Phase 2 into Phase 3 tends to be the biggest value jump for the likes of GW and conventional biotech firms.”

Its early investors included UK FTSE 100 giant Imperial Brands and Snoop Dogg’s cannabis vehicle Casa Verde Capital. The recent IPO fundraise saw it secure a further £16.5m with investors from around the world participating in a ‘heavily oversubscribed’ round.

Mr Sathianathan said: “We have attracted a global investor base of very patient capital with institutional and sophisticated ultra-high net worth individuals from a range of the geographies, including the UK, Europe, Asia and the US.”

While its research is undertaken by both Oxford University and The University of Roehampton, OCT is not like a traditional university spin-out as the university does not own any equity in the business. OCT sub-contracts the research to its academic and industry partners and owns all the IP generated.

Skilled Executive Team

The company has seven full-time employees and around 50 sub-contracted staff undertaking research. The executive team is led by CEO Dr John Lucas, who has a 20 year career in the biotech industry, and COO Clarissa Sowemimo-Coker who brings commercial and legal experience. Chief Scientific Officer Valentino Parravicini, who joined last year, has a distinguished track record in both industry and academia.

OCT’s progress will make it one of the few pharmaceutically-driven global companies operating in the cannabis space; two others are GW and Corbus with both listed on NASDAQ.

Corbus suffered a blow last year when its anti-inflammatory cannabinoid drug Lenabasum failed to meet expectations in Phase 2 and Phase 3 trials, leading to a drop in its market value and a company downsizing.

With cannabinoid medicine still in its infancy OCT decided to stick to treatment for one indication, namely, pain.

Mr Mahapatra said: “The medical potential of cannabis is immense, so to go for too many indications left a risk of getting distracted. We decided to stay focused on one therapeutic area.

Hard Yards To Cover

Mr Sathianathan: “We still have some hard yards to cover, and it will be require more capital, but the size of the prize in gaining the confidence of the doctors to prescribe cannabis medicines will be immense, as GW have proved over the last few years.”

Mr Mahapatra went on to say that if OCT were to achieve a fraction of the success of GW for one of the indications then it will ‘satisfy the shareholders of OCT’.

GW Pharmaceuticals is the first global cannabinoid pharma brand. The UK company was formed in 1998 and went on to develop licensed drugs Sativex and epilepsy drug Epidiolex. In February, this year, Irish firm Jazz Pharmaceuticals agreed to purchase GW for $7.2bn.

OCT’s LSE share price has fallen from a high of over 7p on its first day of trading – Friday May 21 – to 4.9p last night. See here.

OCT’s Development Programme

OCT’s current four drug streams are firstly, a cannabinoid mimetic, licensed from AskAt – a Pfizer spin-off in Japan – which acts like a cannabinoid but has a different molecular structure and targets the CB2 receptors in the body.

Secondly are naturally occurring plant cannabinoids, targeting orphan indications with the potential for market exclusivity.

Thirdly is the OCT plant cannabinoid library which sees cannabinoids extracted from the plant and then put through a medicinal chemistry programme to alter the structure with the aim of improving the properties of the molecule and developing novel IP.

And finally is a new set of molecules to be derived in conjunction with a contracting partner screening some 400,000 compounds.

A double-blind placebo trial sees some participants receive a placebo, with Phase One involving a small sample of up to 100, Phase 2; 100-300, and Phase 3; generally 3,000-plus.