Oxford Cannabinoid Technologies Holdings plc

("OCT" or the "Company")

Intended Cancellation of Listing

The Board of Oxford Cannabinoid Technologies Holdings plc (LSE:OCTP), a clinical stage biopharmaceutical company focused on the development and commercialisation of innovative cannabinoid medicines, today announces that it has applied to the Financial Conduct Authority ("FCA") and London Stock Exchange plc ("LSE") to effect a cancellation of listing of its ordinary shares on the Standard segment of the FCA's Official List (the "Standard List") and trading on the Main Market for listed securities of the LSE ("Main Market") ("Cancellation").

The Directors have recently completed an internal strategic review exercise which focused on addressing how the Company might best seek to ensure the growth of the Company, with a particular focus on how to attract new investment to advance our drug development programmes in a timely manner. Given the continued turbulence in the UK public markets, the Directors unanimously concluded that the Cancellation will be in the best interests of the Company, its business and existing shareholders as a whole.

The Directors must stress that the Company continues with its drug development pipeline as communicated, has no near-term cash flow concerns and remains debt-free.  Detailed rationale for the Cancellation is provided in the letter to Shareholders which is set out in full in Appendix 1 to this announcement.   

As a Standard Listed company, OCT is not required to obtain the approval of shareholders for the Cancellation. Pursuant to Listing Rule 5.2.8R, the Company is required to give at least 20 business days' notice of the intended cancellation of its listing. It is therefore anticipated that the Cancellation will become effective at 8.00am on 6 June 2024. Following the Cancellation, the Company will no longer be subject to the regulatory and statutory regime which applies to companies admitted to the Standard segment of the Official List and traded on the Main Market.

Clarissa Sowemimo-Coker, CEO said,

"The UK capital markets are facing particularly challenging times and many biopharma businesses like ours are re-evaluating whether it is the right home for them. We believe that the market is significantly undervaluing OCT. This has a negative impact on our ability to raise the capital necessary to drive our programmes at a price that the Board believes would be acceptable noting the current market capitalisation. In turn, these market conditions compromise our ability to deliver on our core mission - bringing help to people living with debilitating conditions. We anticipate that as an unlisted company, a far larger pool of capital may be available to us, and therefore it is right for us to make this change."

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. Upon publication of this announcement, this inside information is now considered to be in the public domain.

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

Enquiries:

Appendix 1

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt about the contents of this letter, its likely impact on you and/or the action you should take, you should immediately consult your stockbroker, bank, solicitor, accountant, fund manager or other appropriate independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are resident in the United Kingdom or, if not, another appropriately authorised independent financial adviser in your own jurisdiction.

If you have sold or otherwise transferred all of your ordinary shares in Oxford Cannabinoid Technologies Holdings plc (or will have sold or transferred all such shares prior to implementation of the proposals described below), please pass this document to the purchaser or transferee, or to the person who arranged the sale or transfer, for onward transmission to the purchaser or transferee.

8 May 2024

Dear Shareholder,

PROPOSED CANCELLATION OF STANDARD LISTING

As you will be aware, Oxford Cannabinoid Technologies Holdings plc ("OCT" or the "Company") is listed on the Standard segment of the FCA's Official List (the Standard List) with its shares being admitted to trading on the Main Market of the London Stock Exchange.  This listing has been in place since May 2021.  

Further to the regulatory news service announcement made on 8 May 2024, the Company is writing to advise shareholders of its intention to cancel the listing of its ordinary shares on the Standard List (the Cancellation) and to trading on the Main Market of the London Stock Exchange (the LSE listing). 

As a Standard Listed company, the Company is not required to obtain the approval of shareholders for the Cancellation and is instead required only to provide the FCA with 20 business days' prior notice.  The directors of the Company (the Directors) unanimously consider the Cancellation to be in the best interests of the Company, its business and existing shareholders as a whole. 

The Cancellation will take effect at 8am on 6 June 2024.

Background

OCT's mission has always been driven by a desire to bring help to people living with debilitating conditions, as efficiently and effectively as possible. The Company's listing on the Main Market of the London Stock Exchange in May 2021 was predicated on our ambition to gain access to new investors in public markets as the most effective way of accelerating our drug development programme in order to achieve this outcome.

We are proud to have founded and grown our business in the United Kingdom which, as an international centre of excellence for life sciences, has proven to be a good place to build a growth business during its early stages. Since its IPO, OCT has accumulated an impressive range of proof points clearly demonstrating the strategic long-term value of the Company. We have completed our first clinical trial for our lead programme, OCT461201, and will shortly be commencing a Phase I clinical trial for our second programme, OCT130401 in line with what we have previously announced to the market.

The continuing turbulence in the UK public markets has had a punitive effect on sentiment in biopharma as a sector, and on quoted biopharma businesses in particular, and has exerted continuous, irrational and regressive pressure on our share price. This has constrained the Company's ability to sustain a sensible valuation in a manner that reflects its record of scientific and clinical achievements, its growing pipeline of innovations and valuable portfolio of proprietary assets. In turn, this has impeded our ability to raise investment on equitable terms in order to advance our drug development programmes in a timely way.

The Board believes that the Company's current market capitalisation on the Main Market in no way reflects the prospective value of its current pipeline of four drug development programmes, or the value predicated by our proprietary portfolio of almost five hundred cannabinoid derivatives. As at the date of this letter, there were 1,088,415,644 ordinary shares in issue and the market capitalisation of the Company as at 7 May 2024, at the bid price of 0.35p, was approximately £3.8m. Against this backdrop, it is hard for the Board to overlook a recent research report by Edison on OCT that valued the company in excess of £27 million on the basis of just one of OCT's clinical programmes.

The Directors, therefore, believe that the inherent value of the Company is likely to be well in excess of the current market capitalisation and, without the ongoing burden of the listed regulatory environment and associated costs of listing, the Company could grow and further enhance its business. This has led the Board to reconsider whether the public markets, at this time, provide the right framework within which ground-breaking UK medical research and innovation can best be pioneered, delivered and sustained over time.

Strategic Review and Evaluation of Listing

The Directors have undertaken a thorough review to evaluate the advantages and disadvantages of retaining the Admission to trading of the Ordinary Shares on the Main Market.

The Directors consider that the key drawbacks of retaining the Company's listing on the Main Market include the following:

·      since OCT was listed in May 2021, there have been significant changes in the UK public markets. There has been a noticeable decrease in liquidity, access to capital, and institutional interest in the biopharma growth sector. There are a number of our peers in the life sciences sector, some with late stage Phase 2-3 assets who have delisted and cited a lack of institutional support in the sector. The Company's Directors are of the opinion that the current public market valuation of the Company is not an accurate reflection of its value and poses a significant obstacle to the Company's plans and aspirations;

·      based on feedback from potential investors, the Directors believe that OCT would be a more attractive proposition as an unlisted company. Furthermore, the Directors believe that there could be a much larger pool of available capital if OCT were an unlisted company as compared to being a listed one;

·      there has been limited liquidity in the Ordinary Shares for some time and, as a result, the Directors believe that continued Admission to trading on the Main Market no longer sufficiently affords the Company the advantage of providing wider or more cost-effective access to capital in the short to medium-term;

·      as a result of the limited liquidity in Ordinary Shares highlighted above, the listing of the Ordinary Shares on the Main Market does not necessarily offer investors the opportunity to trade in meaningful volumes and does not appear therefore to be an active market at the smaller market capitalisation. With low trading volumes, the Company's share price can move up or down significantly following trades of small volumes of Ordinary Shares;

·      the considerable cost, management time and the legal and regulatory burden associated with maintaining the Company's Admission to trading on the Main Market are now disproportionate to the benefits to the Company, given that the continued listing is unlikely to provide the Company with significantly wider or more cost-effective access to capital than alternative funding options; and

·      the above negative impacts resulting from being listed give rise to adverse influences on the business in terms of operational activities, long term strategy and future plans.

Prior to progressing with our cancellation of the LSE listing, the Directors consulted a number of the Company's larger shareholders and our proposals received widespread support.  The outcome of these consultations has been taken into account in the key considerations mentioned above. In particular, recent investor, Cantheon Capital LLC, a US-based healthcare sector specialist, remains supportive of the Company and will be funding OCT130401's Phase I clinical trial, as previously announced, as OCT transitions to being an unlisted company.

Accordingly, and following careful consideration, the Board considers the disadvantages associated with maintaining the Admission of the Ordinary Shares to trading to be disproportionate when compared to the perceived benefits of being listed on the Main Market, and the Board has therefore unanimously concluded that the Cancellation is in the best interests of the Company and its Shareholders as a whole.

Process for, and principal effects of, Cancellation

The Directors are aware that certain Shareholders may be unable or unwilling to hold Ordinary Shares once the Cancellation becomes effective. Such Shareholders should consider selling their interests in the market prior to the Cancellation becoming effective.

Under the Listing Rule 5.2.8, the Cancellation can only take place after the expiry of a period of 20 Business Days from the date on which notice of the Cancellation is given. Accordingly, the last day of dealings in the Ordinary Shares on the Main Market will be 5 June 2024, and the Cancellation will become effective at 8.00 a.m. on 6 June 2024.

The principal effects of the Cancellation will be that:

·      there will no longer be a formal market mechanism enabling Shareholders to trade their shares through the Main Market;

·      the regulatory and financial reporting regime applicable to companies whose shares are admitted to trading on the Main Market will no longer apply;

·      Shareholders will no longer be afforded the protections given by the Listing Rules, such as the requirement to be notified of certain material developments or events (including substantial transactions, financing transactions, related party transactions and certain acquisitions and disposals) and the separate requirement to seek shareholder approval for certain other corporate events such as reverse takeovers or fundamental changes in the Company's business;

·      Hybridan will continue to be the Company's financial adviser but will cease to be the Company's broker;

·      the Company will no longer be required to disclose publicly any change in major shareholdings in the Company under the Listing Rules or the Disclosure Guidance and Transparency Rules;

·      the Company will no longer be subject to UK MAR regulating inside information and other matters;

·      in the absence of a formal market and quote, it may be more difficult for Shareholders to determine the market value of their investment in the Company at any given time; and

·      the Cancellation may have taxation or other commercial consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser.

The above considerations are not exhaustive and Shareholders should seek their own independent advice as to whether continuing to hold shares in the Company following the Cancellation is suitable or whether the Cancellation has any adverse tax consequences for them.  Tax rules can change and the precise tax implications for shareholders will depend on their particular circumstances.

The Company will remain registered as a public limited company with the Registrar of Companies in England & Wales in accordance with and subject to the Companies Act 2006, notwithstanding the Cancellation. Shareholders should also note that the City Code on Takeovers and Mergers will continue to apply to the Company following the Cancellation.

Transactions in the Ordinary Shares post the proposed Cancellation

If a shareholder retains their Ordinary Shares following the Cancellation, although the Ordinary Shares will remain freely tradeable, they will no longer be tradeable on the Main Market.

The Directors are aware that the Cancellation will make it more difficult to buy and sell Ordinary Shares in the Company following the Cancellation. Therefore, the Company is exploring the implementation of a Matched Bargain Facility after the Cancellation to assist Shareholders to trade in the Ordinary Shares. If implemented, details will be made available to Shareholders on the Company's website at www.oxcantech.com.

Shareholders will continue to be able to hold their shares in uncertificated form (i.e. in CREST) and should check with their existing stockbroker whether they are willing or able to trade in unquoted shares.

Shareholders should also be aware that any such Matched Bargain Facility could be withdrawn at a later date. It is the Company's intention, if implemented, to make this available for a period of 12 months initially.

Conclusion

Today's announcement represents an exceptional opportunity for the Company to reset, to engage with investors who have the appetite to develop a long-term relationship with OCT, and to build a valuation that appropriately reflects and celebrates the Company's track record and assets, supporting our mission as a business developing and commercialising ground-breaking biopharma research.

In due course, the Company expects to re-list on a regulated investment exchange that recognises the true underlying value of the business. We remain a British company, and we are proud to be part of the UK life sciences sector and believe in its strength and depth. We also note a perceived rising tide of informed market sentiment that appears to suggest quoted companies may realise a better reflection of their intrinsic valuations by moving their listing to North America. The US, specifically NASDAQ, provides an attractive option with its deep pool of life science capital markets.

The Board is not at this point making any firm decisions as to where it may in the future re-list. The Board remains supportive of the UK listed and quoted markets and understands that changes in the UK listed landscape may present further opportunities in future.

After Cancellation, the Directors will retain all their ordinary shares and hope to benefit from any future growth. They encourage shareholders to have confidence in the future of the business and thank them for their continual support and loyalty. Investors are welcome to continue to follow and support the growth story of the business as a privately held company.

Yours faithfully,

Julie Pomeroy

Independent Non-Executive Chair, Oxford Cannabinoid Technologies Holdings plc