REG - Oxford Cannabinoid - Intended Cancellation of Listing

Oxford Cannabinoid Technologies HoldingsAnnouncement

08/05/2024 07:00

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RNS Number : 5006N  Oxford Cannabinoid Tech.Holdings  08 May 2024

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:

 Oxford Cannabinoid Technologies Holdings plc  +44 (0)20 3034 2820
 Clarissa Sowemimo-Coker (CEO)                 clarissa@oxcantech.com (mailto:clarissa@oxcantech.com)

 Hybridan LLP, Financial Adviser and Broker
 Claire Louise Noyce                           +44 (0)20 3764 2341

 Acuitas Communications, Financial PR          020 3745 0293 / 07799 767676
 Simon Nayyar                                  simon.nayyar@acuitascomms.com
 Jake Davis                                    jake.davis@acuitascomms.com

 

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

 

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