TIDMOCTP
RNS Number : 8684K
Oxford Cannabinoid Tech.Holdings
31 August 2023
31 August 2023
Oxford Cannabinoid Technologies Holdings plc
("OCTP", or the "Company")
Final Results for year ended 30 April 2023, Filing of Annual
Report and Accounts and Notice of Annual General Meeting
Oxford Cannabinoid Technologies Holdings plc (LSE: OCTP), the
pharmaceutical company developing prescription cannabinoid
medicines, is pleased to announce its final results for the year
ended 30 April 2023 (the "Period") ("Final Results"), as well as
the filing of its Annual Report and Accounts.
Commenting on the results, Julie Pomeroy, OCTP Non-Executive
Chair, said:
"This has been a defining year for Oxford Cannabinoid
Technologies, marked by a number of major milestones and
significant achievements. The dedication, expertise and relentless
pursuit of excellence by our team has delivered the transition of
OCT from pre-clinical stage to a clinical-stage pharmaceutical
company. We have seen two of our programmes complete their
pre-clinical stages during the year with one of them moving into a
Phase I clinical trial in Q2 2023 and are well-positioned for
future clinical developments."
Operational Highlights
-- Completion of pre-clinical research for OCT461201 (Programme 1) the Group's lead-compound.
-- Submission of is first clinical trial application for
OCT461201 by the Medicines and Healthcare products Regulatory
Agency (MHRA) and Wales Research Ethics Committee 2 (REC 2)
-- Approval of the first Phase I clinical trial for OCT461201.
-- Completion of pre-clinical research for OCT130401 (Programme 2), a combination of inhaled phytocannabinoids for Trigeminal Neuralgia, now ready for Phase I clinical trials subject to additional funding.
-- First meeting of the Scientific Advisory Board leveraging the
extensive experience of industry-leading experts to complement our
patient-centric strategy.
-- Recognition in The Sunday Times Best Places to Work 2023
Awards in its small companies category.
-- Strengthening of the core team with the appointment of Paul
Smalley as Group Finance Director and Rob Bennett as General
Counsel and Company Secretary.
-- Ongoing work with existing commercial partners including
Aptuit (Verona) SRL (a subsidiary of Evotec SE), Dalriada Drug
Discovery Inc (Dalriada), Canopy Growth Corporation and Simbec
Research Limited.
-- Appointment of Axis Capital Markets Limited as Corporate Broker.
Financial Highlights
-- Robust balance sheet, debt-free with cash reserves of
approximately GBP2.3m at year-end (30 April 2022: GBP9.2m). Cash is
forecast to be fully utilised by April 2024.
-- Cash absorbed by operations of GBP7.0m (FY2022: GBP5.4m);
Loss for year of GBP5.9m (30 April 2022: GBP4.7m).
-- Basic and diluted loss per share of (0.62p) (30 April 2022: 0.49p loss).
-- Cost savings continued, including closure of London office in
April 2022, expected to generate savings of approximately GBP130k
p.a.
-- Research costs (excluding salary costs) increased in line
with budget to GBP4.3m (30 April 2022: GBP2.9m), of which GBP2.0m
relates to OCT461201 and GBP1.9m on OCT130401. A further GBP0.4m
was spent on Programmes 3 and 4 mainly relating to the development
of CB1/CB2 agonists by Dalriada .
-- Operational costs increased from GBP2.3m to GBP2.7m,
including salaries and associated costs of GBP1.4m.
-- Exceptional items of GBP0.1m (30 April 2022: GBP0.3m) relate
to share based (non-cash) payment charges. R&D tax credit in
the period of GBP1.1m (30 April 2022: GBP0.8m), with tax losses
surrendered for the R&D tax credit payment.
Post Period-end highlights
-- MHRA and REC 2 approval of Phase I clinical trial application for OCT461201.
-- Appointment of Dr Tim Corn as Chief Medical Officer, further strengthening the core team.
-- Expansion into oncology with a potential "first-in-class"
immunotherapy agent for solid tumours.
-- Successful administration of the first-in-human dose of
OCT461201, as part of its Phase I clinical trial.
On current trading and prospects, Clarissa Sowemimo-Coker, CEO,
added:
The successful advance of our lead drug candidate, OCT461201, to
its Phase I clinical trial, marks a major milestone for Oxford
Cannabinoid Technologies and is the culmination of years of patient
research and endeavour. This brings us one step closer to
delivering a vital solution to meet the needs of patients living
with chronic pain conditions. During FY2022-23, we continued to
deploy our cash and resources prudently, ensuring that we are
well-positioned to meet our future objectives in order to develop
therapies that can transform the lives of patients everywhere."
Analyst Briefing, 9.30am, Today 31 August 2023
A briefing for analysts will be held at 9.30am BST today.
Analysts interested in attending should contact Acuitas
Communications by emailing oct@acuitascomms.com or by calling +44
(0)20 37450293.
Investor Presentation, 1.30pm, Today 31 August 2023
A live online presentation via the Investor Meet Company
platform will also be held at 1.30pm (BST) today, which is open to
all existing and potential shareholders. Questions can be submitted
at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add
to meet Oxford Cannabinoid Technologies Holdings plc via:
https://www.investormeetcompany.com/oxford-cannabinoid-technologies-holdings-plc/register-investor
Investors who follow OCTP on the Investor Meet Company platform
will automatically receive an invitation to the event.
Notice of Annual General Meeting ("AGM")
The Company's AGM will be held at the offices of Penningtons
Manches Cooper LLP at 125 Wood Street, London on 28 September 2023
at 11 a.m.
T he following documents will be posted to shareholders in due
course:
1. Notice of 2023 AGM ;
2. Form of Proxy for the 2023 AGM; and
3. The annual report and accounts for the period ended 30 April
2023.
An announcement will be made regarding the posting of these
documents as appropriate. Once published, hard copies will be
available to shareholders upon request to the Company Secretary at
Prama House, 267 Banbury Road, Oxford OX2 7HT and soft copies will
be available for download and inspection from the Company's website
at www.oxcantech.com and from the FCA's National Storage Mechanism
at
www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism
The financial information set out below does not constitute the
Company's statutory financial statements for the period ended 30
April 2023. The financial information for 2023 is derived from the
statutory accounts for that period. The auditors, Moore Kingston
Smith LLP, have audited the 2023 financial statements. Their report
was unqualified but included disclaimer of opinion in relation to
going concern.
The announcement has been prepared on the basis of the
accounting policies as stated in the financial statements for the
year ended 30 April 2023. The information included in this
announcement is based on the Company's financial statements which
are prepared in accordance with International Financial Reporting
Standards (IFRS). The Company will publish full financial
statements that comply with IFRS on its website in due course.
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:
O xford Cannabinoid Technologies
Holdings plc +44 (0)20 3034 2820
Clarissa Sowemimo-Coker (CEO) clarissa@oxcantech.com
Cairn Financial Advisers LLP
Emily Staples +44 (0)20 7213 0897
Jo Turner +44 (0) 20 7213 0885
Axis Capital Markets Limited
Richard Hutchison +44 (0)20 3026 0320
020 3745 0293 / 07799
Acuitas Communications 767676
Simon Nayyar simon.nayyar@acuitascomms.com
Arthur Dingemans arthur.dingemans@acuitascomms.com
About Oxford Cannabinoid Technologies Holdings Plc:
Oxford Cannabinoid Technologies Holdings plc ("OCTP") is the
holding company of Oxford Cannabinoid Technologies Ltd (together
the "Group"), a pharmaceutical Group developing prescription
cannabinoid medicines initially targeting the U$ multi-billion
global pain market.
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")),
with Phase I clinical trials, aimed at demonstrating safety and
tolerability. Trial results are expected in Q3 2023. The global
market for CIPN alone is currently valued at US$1.61bn and is
forecast to reach US$2.37bn by the year 2027.
OCTP's drug development pipeline comprises both natural and
synthetic compounds, and includes compounds targeting trigeminal
neuralgia, a severe type of face pain, and cannabinoid derivatives
targeting pain and potentially other therapeutic areas. Having
established an exclusive license agreement with Canopy Growth
Corporation for their entire pharmaceutical cannabinoid derivative
library, OCTP now has a portfolio of almost five hundred
derivatives and intellectual property rights including fourteen
patent families and associated research data.
OCTP has a clearly defined path to commercialisation, revenues
and growth. The Group is developing drug candidates through
clinical trials to gain regulatory approval (FDA/MHRA/EMA) that
will enable medical professionals to prescribe them with
confidence. OCTP's portfolio aims to balance risk, value and time
to market, whilst ensuring market exclusivity around all its key
activities.
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.
Strategic report - HOW WE CREATE VALUE
Chair's Statement
As the Chair of Oxford Cannabinoid Technologies Holdings Plc
(OCT), it is with a sense of pride and optimism that I present to
you the annual report for this year. The unwavering dedication of
our team, coupled with the support of our partners and
shareholders, has enabled us to make significant progress. We
remain focussed on our mission to harness the power of cannabinoid
medicines to improve the lives of patients.
A Year of Significant Progress and Transformation
This year has been a defining period for OCT, marked by a number
of major milestones and achievements. The transition of OCT from a
pre-clinical stage pharmaceutical company to a clinical-stage one
is a testament to the dedication, expertise, and relentless pursuit
of excellence by our talented team. We have seen two of our
programmes complete their pre-clinical stages during the year with
one of them moving into a Phase I clinical trial in Q2 2023.
After extensive research and development, our lead drug
candidate, OCT461201 has now received approval from the Medicines
and Healthcare Products Regulatory Agency (MHRA) and the Wales
Research Ethics Committee 2 (REC 2) for Phase I clinical trials.
This is not just a procedural milestone; it is a major step towards
our core objective of bringing relief to patients suffering from
debilitating pain. The global market for chemotherapy-induced
peripheral neuropathy (CIPN), which OCT461201 targets, is
burgeoning. With its value forecast to reach US$1.17 billion by
2028, this market presents a significant opportunity for OCT to
make a difference to patients' quality of life.
During the year pre-clinical work on our drug candidate,
OCT130401, was completed successfully. This programme is developing
synthetic phytocannabinoids (pCBs) in combination with a medical
device.
Addressing Challenges with Resilience
The pharmaceutical industry is inherently complex and dynamic.
The challenges are multifaceted, ranging from regulatory hurdles to
financial constraints. However, our team, under the leadership of
our Chief Executive Officer (CEO), Clarissa Sowemimo-Coker, has
demonstrated resilience and innovation. The leadership transitions
during the year have been smooth, and the new members of our
executive team, Paul Smalley, Finance Director, and Rob Bennett,
General Counsel and Company Secretary, have brought new insight and
expertise. I would like to thank the whole team whose dedication
and expertise have been the driving force behind our achievements.
I would also like to thank Dr. John Lucas and Karen Lowe, who left
us during the year, for their contribution to our journey.
Strengthening Partnerships and Collaborations
Our progress would not have been possible without forging strong
partnerships and collaborations. This year, we strengthened our
collaboration with Simbec-Orion, a clinical research organisation
with an impressive track record. This partnership has been
instrumental in advancing our lead drug candidate through to
clinical trial. Additionally, our contract research agreement with
Aptuit (Verona) SRL, a subsidiary of Evotec SE, has been vital in
our pre-clinical work on OCT461201. These collaborations epitomise
our commitment to aligning with industry leaders to expedite our
goals.
In August 2022, we achieved another milestone with the inaugural
meeting of our Scientific Advisory Board (SAB) in London.
Comprising a panel of highly regarded experts in our therapeutic
areas of interest, the SAB has been a catalyst in bridging the gap
between pre-clinical research, clinical trials, and patient care.
The insights and guidance provided by the SAB have been invaluable
in shaping our clinical strategy. This ensures that our approach is
not only scientifically rigorous but also patient-centric.
Corporate Governance
Corporate governance is the backbone of OCT. As a company listed
on the London Stock Exchange's Main Market , we are acutely aware
of the responsibilities and scrutiny that come with this status.
Our board, advised by Rob Bennett, our General Counsel and Company
Secretary, has ensured that our governance structures are robust
and transparent. We have developed a comprehensive risk management
framework that is adaptive to the ever-changing landscape of the
pharmaceutical industry. We remain strongly committed to
transparency, accountability, and probity. We regularly review the
alignment of our governance practices with the UK Corporate
Governance Code and other relevant standards and regulations.
Environmental and Sustainability Initiatives
We are also conscious of our environmental impact and are
actively seeking ways to reduce our carbon footprint and contribute
to a sustainable future. Following COVID-19 lockdowns, we ended our
lease on a permanent head office, moving to a modern
technology-enabled remote-only approach. This not only reduces the
carbon footprint by eliminating daily commutes but also saves time,
reduces costs, and allows us to recruit a diverse workforce beyond
commuting distance. We supplement this remote-first approach with
co-working spaces and periodic get-togethers to build and reinforce
culture and team cohesion.
Looking Ahead
We are now starting the clinical phases of our lead compound
whilst continuing with our pre-clinical work on other compounds .
Our focus remains on harnessing the power of cannabinoid medicines
to make a meaningful difference in the lives of patients. We will
continue to innovate, collaborate, and uphold the highest standards
of corporate governance. We can only do this with the continued
support of our staff, our partners and our shareholders who have
all played such an important role in our development so far and for
which I offer my sincere thanks. By working together, we have the
power to change lives and shape the future of cannabinoid medicine
for the benefit of patients worldwide.
Julie Pomeroy
Chair
CEO's Review
I am immensely proud to share my first update as CEO of OCT. We
have made significant progress over the year and we believe we are
poised for further success in the next year.
Drug Development
Our lead drug candidate, OCT461201, has successfully advanced to
its Phase I clinical trial , marking a significant milestone as we
transition from a pre-clinical to a clinical-stage pharmaceutical
company. This achievement is particularly noteworthy as OCT461201
has demonstrated considerable promise as a potential therapy for
CIP N and Irritable Bowel Syndrome (IBS). Our dedicated team of
scientists and researchers have been working tirelessly to ensure
that the development of OCT461201 is based on rigorous scientific
principles. The progression to clinical trial is a culmination of
extensive research, and it brings us one step closer to providing a
much-needed solution for patients suffering from chronic pain
conditions. It is a testament to our unwavering commitment to
innovation and excellence in developing therapies that can
transform lives.
Our People
In this past year, our people have continued to be our
foundation. We're proud to share that our dedicated focus on
enhancing employee engagement has led to our recognition as one of
The Sunday Times Best Places to Work in 2023. Despite our small
team size, we see career growth not just in terms of hierarchy, but
in the broadening of skills and responsibilities. This unique
approach enables our team members to engage in diverse projects and
actively contribute to our Company's direction. Our vibrant and
supportive work environment, which encourages both personal and
professional growth, is a testament to our employees' unmatched
dedication and resilience. As we continue to shape the future of
our industry, we thank our teams for their commitment to our
mission.
Business Model and Drug Development Strategy
At OCT, our business model is thoughtfully devised to reflect
our mission, values, and commitment to excellence. We focus on
developing prescription cannabinoid medicines, with a particular
emphasis on the significant pain market, whilst ensuring a
patient-centred approach.
Our patient-centred approach is fundamental to our business
model, and the recent appointment of Dr. Tim Corn as Chief Medical
Officer (CMO) at OCT is a testament to this commitment. Dr. Corn,
an esteemed figure in the pharmaceutical industry, has held senior
positions in several organisations and has been instrumental in
over twenty regulatory approvals in the US and Europe. As CMO, he
will oversee clinical research and development activities,
providing expert medical guidance. His appointment marks a
significant step in strengthening our senior team and aligning our
efforts with clinical excellence as we move into our clinical phase
and progress our programmes through clinical trials towards
commercialisation. In summary, our business model goes beyond
financial gains; it's about profoundly impacting lives through
innovation, collaboration, and unwavering adherence to our
values.
Scientific Advisory Board
In August 2022, OCT held the first meeting of its SAB in London.
Hosted by our Chief Scientific Officer (CSO), Dr. Valentino
Parravicini, the SAB has been instrumental in bridging the gap
between pre-clinical research, clinical trials, and patient care.
The SAB, comprising esteemed experts, provided advice and guidance
on the design of our Phase I clinical trials for OCT461201 and
OCT130401. The insights garnered from these meetings have been
invaluable in shaping our clinical strategy. Additionally, the
establishment of the SAB last year reflects our commitment to
cultivating a best-in-class network of scientific, academic, and
commercial partners. With the recent appointment of Dr. Corn as
CMO, we are further bolstering this network and validating our
vision. The SAB has continued to meet on a regular basis, providing
critical insights and guidance, ensuring that our drug development
programmes are not only scientifically sound but also centred
around the needs of the patients.
Financial Risk Management
I would like to emphasise the paramount importance we place on
financial risk management. It is essential to our long-term
sustainability and our ability to continue making strides in the
development of cannabinoid medicines . We are acutely aware that
our stakeholders expect judicious management of our financial
resources. To this end, we have been meticulously managing our cash
and resources, ensuring that we are well-positioned to meet our
objectives. Notably, our clinical trial for OCT461201 is being
entirely funded from OCT's existing resources, which is a testament
to our commitment to prudent financial stewardship.
Moreover, our approach to financial risk management is
underpinned by a comprehensive understanding of the various types
of risks, including market, credit, and operational risks. We have
integrated risk appetite statements into our governance framework,
ensuring that decision-making across the organisation is aligned
with our risk tolerance levels. This approach supports us in
safeguarding OCT's resources and ensuring the stability of our cash
flows, which is crucial for capitalising on growth opportunities
and delivering value to our shareholders.
In conclusion, financial risk management is not just a function;
it is an ethos that permeates every facet of our operations.
Through vigilant governance, informed decision-making, and a
commitment to transparency, we are fortifying OCT's financial
foundations and paving the way for continued innovation and
growth.
Note 20 of the notes to the financial statements explains the
Group's exposure to financial risks and how these risks could
affect the Group's future financial performance.
Outlook for the Future
As we look to the future, we feel a sense of modest optimism and
hopeful expectation. Our lead drug candidate, OCT461201, is poised
to complete its Phase I clinical trial in Q3 2023. This milestone
is not just a step in the regulatory process; it is a beacon of
hope for countless patients with unmet needs in pain management.
The data we expect to gather regarding the safety, tolerability,
and pharmacokinetic profile of OCT461201 will be instrumental in
shaping the subsequent phases of clinical trials and supporting our
indication expansion strategy, enabling us to help even more
patients with unmet needs. We have built a strong, dedicated team,
and our lean structure and flexibility as a small business has
enabled us to remain on target for our stated objective of
regulatory approval during 2027 - an incredibly short timeframe
made possible by our "fast-track" drug development strategy, which
lowers developmental risk, costs, and timeframes.
Furthermore, our pipeline of drug candidates is robust and
diverse. With the insights gained from our SAB and the support of
our partners, we are well-positioned to explore new therapeutic
avenues and further expand our portfolio. Our recent expansion into
oncology (Programme 4) is just one example of this approach in
action. Our commitment to innovation in cannabinoid medicines
remains unwavering, and we will continue to explore the therapeutic
potential of cannabinoids in addressing a range of conditions.
Additionally, we are acutely aware of the dynamic nature of the
pharmaceutical industry and the global healthcare landscape. As
such, we are committed to remaining agile and adaptive, ensuring
that our strategies and operations are attuned to emerging trends
and opportunities. Our collaborations with industry leaders and
academic institutions will continue to be a cornerstone of our
approach, as we believe that collective wisdom and expertise are
critical to driving innovation.
Financial sustainability is also at the forefront of our
considerations. As we advance in our drug development programmes,
we will continue to exercise prudent financial management, ensuring
that we are strategically allocating resources to maximise value
for our shareholders and stakeholders.
In conclusion, the Board anticipates a bright future for OCT.
With a strong pipeline, a committed team, and a clear vision, we
are poised to make significant strides in the realm of cannabinoid
medicines. Our focus remains steadfast on improving the lives of
patients living with debilitating pain and contributing positively
to global healthcare.
Closing Remarks
In closing, I would like to extend my deepest gratitude to our
team, partners, and shareholders for your unwavering support and
dedication, particularly following my appointment as CEO. Your
contributions have been instrumental in our achievements thus far
and I am truly grateful for your efforts. I am confident in our
mission and goals, and I believe that together, we will continue to
make a meaningful impact in the lives of patients and the medical
community at large.
Clarissa Sowemimo-Coker
Chief Executive Officer
CSO's REVIEW
Programme 1: OCT 461201
This programme is a 'cannabinoid-like' new chemical entity (NCE)
for neuropathic and visceral pain conditions.
During the year, the Group has carried out a significant number
of pre-clinical studies which show that OCT461201 is well
positioned for small fibre neuropathies, as it successfully reduced
pain in a model of CIPN.
CIPN is the consequence of the damage caused to the nerves by
common chemotherapeutic drugs. The hallmarks of CIPN are pain,
numbness and tingling in the extremities. On average, up to an
estimated 60% of people undergoing chemotherapy are affected by
CIPN. CIPN can be progressive and enduring, leading to years of
debilitation and suffering.
In response to this encouraging data in CIPN, the Company's
strategy in neuropathic pain, is to focus on a clinical development
programme aimed to benefit patients with small fibre neuropathies,
such as cancer patients suffering from CIPN, and potentially,
patients suffering from diabetic neuropathy.
Globally, there is an urgent need for new therapies to treat
CIPN as there are currently no approved therapies for this
condition. The current standard of care is the off-label use of
gabapentinoids (gabapentin and pregabalin) and antidepressants
(e.g., duloxetine), drugs associated with serious side effects.
Furthermore, in some cases their overall clinical effectiveness is
inadequate, leaving cancer patients in pain, with a reduced quality
of life and the prospect of having to change or stop their
chemotherapy altogether.
The large unmet medical need in patients suffering from CIPN is
estimated to have a global market forecast to reach US$1.17bn by
the year 2028, which, in the view of the Directors, could grow to
over US$7bn once combined with other small fibre neuropathies.
In July 2021, OCT entered into a GBP2.6 million contract
research agreement for the preclinical work on OCT461201 with
Aptuit (Verona) SRL, a subsidiary of Evotec SE (together Evotec ).
This work, which was completed in December 2022, used Evotec's
INDiGO programme, an integrated drug development process for
accelerating early drug candidates to clinical trial stage which
aligns with the Company's strategy of accelerating the standard
pharmaceutical timelines. The INDiGO programme provided the
comprehensive manufacturing, safety, and toxicology packages
necessary for regulatory submission to the UK Medicines &
Healthcare products Regulatory Agency (MHRA) and the United States
Food and Drug Administration (FDA).
In January 2023, OCT submitted a combined clinical trials
application for OCT461201, to the MHRA and REC 2 (the Submission ).
The Submission was a pivotal moment for OCT, as it marked the
beginning of moving from a pre-clinical stage business to a
clinical stage company. Post year end, in May 2023 , we received
combined approval for the Submission from the MHRA and REC 2, and
our first Phase I first-in-human clinical trial commenced in Q2
2023. The trial is being conducted in the UK in healthy volunteers,
with a single ascending dose. The trial aims to demonstrate the
safety and tolerability of OCT461201, whilst also providing pivotal
information on its pharmacokinetic profile, to confirm its value as
a potential drug. The clinical trial is anticipated to complete
within Q3 2023.
Programme 2: OCT 130401
This programme is developing synthetic phytocannabinoids (pCBs)
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. We
estimate that there are currently over 65,000 people living with
the condition in the UK.
The 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.
In January 2022, OCT entered into a drug development agreement
with Charles Rivers Laboratories Edinburgh Ltd (Charles Rivers).
The Charles Rivers work package included completing the preclinical
safety and pharmacological work for the pMDI developed with Purisys
LLC, which provided the current Good Manufacturing Practice active
product ingredients, and Oz UK Ltd, which developed the formulation
and the device. In December 2022 pre-clinical work on OCT130401 was
completed successfully. We were particularly pleased with the
'device through life' with each canister comfortably delivering in
excess of 160 actuations, well over the 120 required by the
regulator. This programme is now ready to enter Phase I clinical
trials, which is subject to a fundraise.
Phytocannabinoid-derivatives library
The Group initially held a library of 93 proprietary cannabinoid
derivatives, with preliminary data from a selection of these
derivatives suggesting that the library contains compounds that
could become candidate drug assets for a range of pain indications.
To supplement this library, in September 2021 OCT signed an
exclusive license agreement with Canopy Growth Corporation (Canopy)
for their entire pharmaceutical cannabinoid derivative library,
including 335 derivatives and intellectual property rights
including 14 patent families and associated research data. During
the year the Company continued to synthesise new derivatives and
the library now includes close to 500 proprietary compounds. The
advantage of this approach is that we can make modifications to the
compounds' structures to achieve improvements in stability,
bioavailability and support the diversification of druggable
targets.
This enlarged library of cannabinoid derivatives is at the
centre of Programmes 3 and 4. OCT has been working with Dalriada
Drug Discovery Inc (Dalriada), to screen the expanded library. for
the drug-like compounds with the aim of targeting multiple
therapeutic areas, including pain, neurology, immune-inflammation
and oncology.
Dalriada previously designed, synthesised, and experimentally
tested all 335 compounds in the Canopy library which means we are
able to leverage Dalriada's existing knowledge and experience as it
continues its experimental research on our behalf. During the year
we have made significant progress on both programmes.
Programme 3
Programme 3, OCT960609, is a dual CB1 and CB2 agonist targeting
an undisclosed neuropathic pain indication, which is active at
3mg/kg per os. In our early studies, OCT960609 has demonstrated
very good bioavailability via oral administration and displays a
better profile than t etrahydrocannabinol ( THC ) (intraperitoneal;
absorption bypassed) in terms of analgesia and behavioural
alterations.
Programme 4
Programme 4 marks a significant expansion for the Company, as
this molecule is a potential "first-in-class" immunotherapy agent
for the treatment of solid tumours. Analysis of the initial data
shows excellent drug-like potential in terms of in vitro potency
and selectivity to target, as well as in vivo availability in
blood. This implies substantive potential for the development of a
cannabinoid-based medicine that could be taken at home, as a
tablet. We are now conducting further studies, including a
safety-pharmacology assessment before final candidate selection,
which we anticipate will take place in 2024.
As the existing programmes move to the next stages of drug
development, the library will continue to provide opportunities to
identify potential new candidates to enter the OCT cannabinoid
research engine .
Closing Remarks
In conclusion, this has been a year of significant progress on
all four drug development programmes. We have made exciting
breakthroughs and have many reasons to be optimistic about the
future. Expanding our remit to include oncology, while continuing
with our primary focus on pain, places us at the forefront of
cannabinoid research and is noteworthy for a company of our size.
Commencing our first clinical trial is a hugely important milestone
for the team, our partners, and all our stakeholders and I am
tremendously proud of our achievements. We're moving ever closer to
our ultimate goal of putting medicines in the hands of patients in
need.
DR Valentino Parravicini
Chief Scientific Officer
Financial REVIEW
Finance Strategy
Our financial strategy is to support, and expedite where
possible, the overall Group aim of developing and commercialising
licensed prescription medicines by maximising the financial
resources available for direct investment in our drug programmes.
This is achieved by operating cost-effective and risk-based
financial and operational controls over all areas of expenditure
and investment into research and development.
Financial Performance
Following the Group's admission to the Official List and to
trading on the London Stock Exchange's Main Market in May 2021
where GBP14.8m net of costs was raised, research costs increased in
line with budget in the year from GBP2,891k to GBP4,304k. These
costs mainly relate to OCT461201 where GBP2,038k was spent on
pre-clinical activity, ahead of the clinical trials which commenced
in Q2 2023 and OCT130401 where pre-clinical activity also
progressed as planned with expenditure of GBP1,874k. Across the
remaining two programmes, GBP378k was spent on programmes 3 and 4
mainly relating to the development of CB1/CB2 agonists by Dalriada.
The remaining spend of GBP14k related to the SAB.
Alongside the research activity, operational costs increased
from GBP2,320k to GBP2,670k, with the main costs relating to
salaries (GBP1,306k) and associated expenses.
A complete review of costs was undertaken in the year to
identify areas of potential savings to maximise the financial
resources available for research. No bonuses have been paid to the
executive team in the year, and remuneration for the C-Suite and
Non-Executive Directors has been frozen at prior year rates. No new
share options have been granted in the year.
Exceptional items of GBP64k (2022: GBP292k) in the year relate
to share based payment charges being prior year share options (to
staff and Board members) and warrants issued to advisers as part of
the IPO process.
T he Group benefited from a research and development (R&D)
tax credit of GBP1,089k in the year, with tax losses surrendered
for the R&D tax credit payment. Due to changes in the criteria
for R&D tax credits, research costs have been recognised in the
Company rather than the subsidiary, Oxford Cannabinoid Technologies
Ltd (OCTL). There was a receivable of GBP1,848k at the year end
relating to R&D tax credits (2022: GBP760k). The prior period
claim (GBP760k) was received in August 2023. Both direct and
indirect costs are now embedded within the finance systems in order
to optimise the claim amount.
C ash absorbed by operations was GBP7,042k (2022: GBP5,373k).
The loss for the year was GBP5,945k (2022: GBP4,712k). Basic and
diluted loss per share was 0.619p (2022: 0.491p). Note 20 of the
financial statements details the Board's exposure to, and
management of, credit, liquidity and cashflow risk.
The Group is not exposed to any significant interest rate or
foreign exchange risks and therefore it does not require any formal
hedging policies to be in place (as detailed in note 20 of the
financial statements).
Other Assets
From the net proceeds raised from the fundraising on IPO in May
2021, cash reserves stood at GBP2,297k at 30 April 2023 (30 April
2022: GBP9,166k) and remain forecast to have been fully utilised by
April 2024.
The licence agreement for OCT461201 held as an intangible asset
by the Group was not impaired in the year (2022: GBP20k), in
addition to an amortisation charge of GBP39k (2022: GBP36k) in the
year, resulting in a closing net book value (NBV) of GBP7k (30
April 2022: GBP46k).
Pr epayments of GBP255k (30 April 2022: GBP1,472k) related to a
contract research organisation (CRO) invoicing in advance of works
to conclude the pre-clinical phase on Programme 1. The majority of
these prepayments are for annual insurances.
Trade and Other Payables
Trade payables of GBP286k (30 April 2022: GBP1,798k) form the
majority of current liabilities of GBP584k (30 April 2022:
GBP2,025k). Accruals of GBP286k (30 April 2022: GBP174k) largely
relate to professional services and advisers.
Key Performance Indicators
The Group has three core KPIs:
KPI 2023 Outcome
Non-financial The lead programme, OCT461201, and
Delivery of milestones detailed Programmes 3 and 4 remain on target
in the IPO prospectus for . OCT130401 was paused post completion
the four core programmes. of pre-clinical, in order to extend
the Group's cash runway.
----------------------------------------------
Financial The Group has a cash runway until
Cash runway (i.e. the length April 2024.
of time that the cash balance
will last given the current
cash burn rate).
----------------------------------------------
Financial At 30 April 2023, the Group's current
Current ratio (i.e. the ability ratio was 7.9 (30 April 2022: 5.8),
of the Group to meet its as a result of cash and current liabilities
liabilities due within 12 reducing .
months with its current assets)
is calculated by dividing
current assets by current
liabilities.
----------------------------------------------
In addition to these three key performance indicators that are
analysed by the Board, wider financial information is reviewed to
ensure the most important and relevant aspects of the Group's
performance are measured and communicated, including research
expenditure (as described under Financial Performance). There is a
focus on ensuring best value is achieved and that costs remain
within budget.
Paul Smalley
Finance Director
MANAGING RISKS
Risk Management
At OCT , we understand that risk management is an integral part
of our business operations. It is a continuous, proactive process
that involves identifying, assessing, responding to, and monitoring
risks. Our risk management process is designed to protect our
business and help us achieve our objectives. In line with our
commitment to constant improvement, we have undertaken a thorough
overhaul of our risk management practices. This comprehensive
review and subsequent refinements enable us to be more adaptable in
an ever-changing environment, bolstering our resilience and
supporting the continued achievement of our goals.
Our Approach to Risk
Our approach to risk management is both strategic and
comprehensive. We consider internal and external drivers of
operational, hazard, financial, and strategic risk areas over
short, medium, and long-term timescales. We consider the effects
they could have on our business model, our culture, and our
strategy. We believe that effective risk management is essential to
the successful execution of our strategy and the achievement of our
objectives.
Risk Appetite
Our risk appetite is determined by the nature of the risk and
how that risk could affect us. We have a higher appetite for risks
that present us with a clear opportunity for reward, and we
actively seek out those that provide the greatest opportunities. We
have some appetite for risks with a possible opportunity for
reward. With these risks, we carefully balance our mitigation
efforts with our view of the possible rewards. We have a very low
appetite or tolerance for risks that only have negative
consequences, particularly when they could adversely impact health
& safety, our values, culture, or business model. We aim to
eliminate these risks with our mitigation efforts. The Board sets
and regularly reviews key and principal risks.
The Risk Management Process
Our risk management process involves four key steps:
Identification : We identify risks from both a bottom-up and a
top-down perspective. We record these in programme risk registers.
We also conduct ad hoc reviews of new and emerging risks throughout
the year as they arise.
Categorisation and Assessment: We assess risks using a
business-wide scoring mechanism that considers both the likelihood
of occurrence and the potential impact. We prioritise them by their
risk score, and an assessment of the level of exposure against our
risk appetite. The assessment criteria of impact and likelihood,
however, is adapted to each risk category to ensure that it is
appropriate for the nature and scope of the risks in that category.
Risks that exceed our appetite may require additional risk
response.
Response: Risks that require a response have additional
mitigation strategies agreed and a future action plan drawn up
together with a timeframe. We assign responsibility for the
implementation of action plans.
Monitoring and Reporting: We provide a consolidated key risks
report to the Executive Committee and Board for review, using
escalation criteria previously set by them. Mitigation plans and
the progress made against them are also reported. The Board
considers and agrees on the key risks, appetites, and mitigation
strategies which are fed back to risk owners. We conduct this
exercise twice yearly and it is used to determine the Group's
principal risks.
Reports
Our risk reporting structure includes:
Risk Register: We record risk registers for each programme in
our drug development pipeline. In addition to this, there is a
business-wide risk register that looks at risks across the
business. The registers include all the information required to
capture the risk accurately and are maintained on our risk
management information system. We identify an owner for each risk
register responsible for its maintenance as well as the risks it
contains.
Key Risk Dashboard: We consolidate our key risk report from the
risk registers. This report outlines the highest-scoring risks,
emerging risk issues, the biggest influences on our risk profile,
and changes to the risks reported. The key risk dashboard also
provides a business-wide perspective on risks.
Principal Risks: We consolidate the principal risks from the key
risk report. These are those risks that we consider could have a
potentially material impact on our operations and/or achievement of
our strategic objectives.
In conclusion, our risk management process is a comprehensive
approach that involves identifying, assessing, responding to, and
monitoring risks. It requires the active involvement of the Board,
senior management, and all employees. It also necessitates the
implementation of robust policies and procedures, effective risk
reporting, and a culture that encourages the identification and
management of risks.
Principal Risks
People
Risk and Impact
OCT's operations could be significantly impacted if we fail to
attract, retain, and develop our key personnel or lose a key team
member.
Mitigating Factors
We operate share option schemes and offer competitive reward
packages to recruit and retain key staff. We have forward planning
of staffing needs and recruitment strategies in place. In the
post-COVID-19 era, we have adopted a remote-first approach,
allowing us to recruit the best talent without geographical
constraint, while offering co-working solutions for those who
prefer not to or cannot work from home. We continue to focus on
leadership development and succession planning.
Mitigation Actions in 2023
We will continue to review and enhance our reward and
recognition packages. We will refine our staffing needs and
recruitment strategies based on our programme progression and
business growth.
Risk Appetite
The success of OCT is driven by our key personnel. We have a low
appetite for people risk and strive to ensure our team feels
valued, rewarded appropriately, and has opportunities to develop
and progress in their OCT career. We understand staff turnover is a
part of all organisations, but we strive to minimise this risk
through our mitigation strategies.
Delayed Drug Development
Risk and Impact
There is a risk that regulatory agencies may delay our
application, impacting our strategic objectives and potentially
altering the programme strategy. This could result in a delay in
OCT's ability to generate product revenues.
Mitigating Factors
To mitigate this risk, OCT maintains dialogue with clinical
sites to ensure flexibility in clinical timelines. We also employ a
thorough vendor selection process to ensure high-quality data,
choosing to work with Tier 1 drug R&D CROs.
Mitigation Actions in 2023
We will continue to maintain regular interaction with clinical
sites and regulatory agencies to ensure we are aligned with their
expectations and can adapt quickly to any changes. We will also
continue to evaluate our vendor selection process to ensure we are
working with high-quality vendors that provide reliable data.
Risk Appetite
OCT understands the inherent risks involved in the regulatory
approval process for new drug products. We have a low appetite for
risks that could lead to significant delays in our programme
strategy. We strive to mitigate this risk through careful planning,
regular communication with regulatory agencies and clinical sites,
and ensuring the quality of our data through rigorous vendor
selection.
Unsuccessful Drug Development
Risk and Impact
In line with other pre-revenue pharmaceutical development
companies, there is a risk that OCT fails to develop a drug product
that can be approved by the regulatory agencies and marketed.
Failure can occur at any stage during the research and development
process. Any termination of any phase in development of our drug
candidates risks harming the commercial prospects of the drug
candidates. The failure to develop an approved drug product could
ultimately lead to the cessation of the business.
Mitigating Factors
OCT is running multiple programmes across several value
inflection points to diversify risk. An experienced CSO is engaged,
and we work with leading specialists in the field to complete
testing and screening on our behalf. An SAB of leading specialists
has been established to oversee the clinical development plan. We
maintain strong communication channels with regulatory bodies,
engaging early prior to moving to clinical trials.
Mitigation Actions in 2023
We will continue to look to diversify our portfolio of drug
development programmes to mitigate the risk of failure in any
single programme. We have recently appointed a CMO to strengthen
the team and oversee our clinical trials. We will also continue to
engage with leading specialists and our SAB to guide our
development efforts. Regular and proactive engagement with
regulatory bodies will remain a key focus to ensure we are aligned
with regulatory expectations and guidelines.
Risk Appetite
Given the nature of pharmaceutical development, OCT understands
that there is a high degree of risk and a high rate of failure
amongst companies for drug candidates proceeding through clinical
trials. However, we strive to mitigate this risk through careful
planning, diversification of programmes, and leveraging the
expertise of our team and advisory board. We have a low appetite
for risks that could lead to the cessation of the business.
Quality Assurance
Risk and Impact
OCT relies on third parties, including CROs, to perform Good
Practice (GXP) activities in a satisfactory manner. There is a risk
that the quality of this research is below the required standard
for the results to be relied on as part of OCT's applications to
the regulatory agencies for their drugs to be licensed. If CROs
fail to comply with applicable current good practices (cGXPs), the
clinical data generated in OCT's R&D may be deemed unreliable.
The regulatory authorities may require OCT to perform additional
activities before approving marketing applications, causing
significant delays to commercialisation and requiring significantly
greater expenditures.
Mitigating Factors
To mitigate this risk, OCT only uses experienced partners with a
successful track record in performing clinical trials to the right
cGXPs. The CSO engages with regulatory authorities to confirm the
required cGXPs. We establish contractual obligations and penalties
for the quality of services with our CRO partners and operate
quality assurance processes by the CSO with support from quality
assurance and regulatory subject matter experts.
Mitigation Actions in 2023
We will continue to monitor the performance of CRO partners and
their adherence to cGXPs. We will review the outcomes of CSO
engagement with regulatory authorities and evaluate the
effectiveness of quality assurance processes and the support
provided by quality assurance and regulatory subject matter
experts. We will also assess the enforcement of contractual
obligations and penalties with CRO partners.
Risk Appetite
OCT has a very low-risk appetite when it comes to quality
assurance. We understand the critical importance of maintaining
high standards in our research and development activities, and we
strive to ensure that all third-party partners adhere to the
highest levels of good practice.
Cash Management
Risk and Impact
As a pre-revenue company investing in drug development, OCT
faces the risk of insufficient funds potentially compromising our
ability to continue development and operations. OCT's reliance on
fundraising and R&D tax credits may result in insufficient
funds for operations, causing delays, financial instability, and
difficulty in attracting new investors.
Mitigating Factors
To mitigate this risk, OCT implements cash flow forecasting and
actively manages cash flow and is fully aware when additional cash
is required for its programmes. Our executive team reviews all
expenditures to ensure we are making the most effective use of our
resources.
Mitigation Actions in 2023
We will continue to implement and refine our cash flow
forecasting and active cash management strategies. We will also
continue to review all expenditures to ensure we are making the
most effective use of our resources.
Risk Appetite
OCT understands the financial risks inherent in pre-revenue
pharmaceutical development. We have a low appetite for risks that
could lead to financial instability or the inability to continue
our operations. We strive to mitigate this risk through careful
financial planning, cash flow management, and prudent
expenditure.
Fundraising
Risk and Impact
With the funds raised from the IPO expected to be fully utilised
by April 2024, there is a risk that OCT will be unable to raise
funds at appropriate rates and at the right time for the business's
needs. Significant volatility in the Group's share price,
unsupportive shareholders, negative news stories, and unfavourable
market conditions could impact our ability to raise further
funding. This could result in a lack of cash for operations,
causing financial instability and difficulty in attracting new
investors.
Mitigating Factors
To mitigate this risk, OCT maintains consistent, frequent, and
transparent investor relations. We have a crisis communications
strategy in place, with detailed specific issue preparedness. Our
CEO and board members maintain relationships with current investors
and outreach to potential new investors. OCT is actively engaging
with shareholders in a variety of ways, including in-person and
virtual meetings, regular podcasts, and recorded visual interviews
with Proactive Investor, StockBox and Investor Meet Company. We
have also been attending and speaking at numerous conferences,
releasing articles to keep shareholders updated on the Company's
progress. These efforts ensure that our shareholders are kept
informed of developments and that their voices are heard.
Mitigation Actions in 2023
We will continue to maintain regular and transparent
communication with our investors and the market. We will also
continue to refine our crisis communications strategy and investor
outreach efforts. Regular and proactive engagement with our current
and potential investors will remain a key focus.
Risk Appetite
OCT understands the financial risks inherent in fundraising for
pre-revenue pharmaceutical development. We have a low appetite for
risks that could lead to financial instability or the inability to
continue our operations. We strive to mitigate this risk through
careful financial planning, investor relations management, and
prudent expenditure.
Leading with Integrity: A Review of Our Commitment to Doing the
Right Thing
Our Ethical Approach to Business
Our business model is built on a foundation of integrity and
ethical conduct. We believe that doing the right thing is not just
a moral obligation but also a key driver of sustainable success.
This year, we have taken significant steps to embed ethical
considerations into our decision-making processes, ensuring that
our actions align with our values and the expectations of our
stakeholders. This commitment is reflected in our adherence to the
Animal Welfare Act 2006 and our voluntary ban on testing on great
apes, even in countries where it is legal to do so.
We recognise the ethical responsibility to treat all animals
respectfully, while striving to minimise their pain or distress,
and to avoid it completely whenever possible. To this end, OCT is
committed to following the high standards of internationally
recognised practices on the humane treatment of animals. We uphold
and embrace the "3Rs" of animal research, namely:
-- the replacement of animals when possible and/or acceptable;
-- the reduction of the numbers of experiments and of animals required by each experiment; and
-- the minimisation of pain and distress, by means of refinement of animal studies procedures.
All animals used in OCT studies are specifically bred for
research. In addition, all facilities where animals are bred,
housed, or undergo procedures are accredited by the Association for
Assessment and Accreditation of Laboratory Animal Care (i.e.,
AAALAC-accredited) or are in the process of first accreditation and
undergo regular visits by AAALAC. This ensures that all animal
staff are competent, trained, continuously educated and assessed.
OCT ensures that qualified veterinarians are available at all times
for advice and help in the care of animals.
We do not work with or test cosmetics, food, or drink
supplements.
Environmental Stewardship
We recognise our responsibility towards the environment and have
implemented measures to reduce our carbon footprint. Our transition
to a remote-first working model, initiated in response to the
COVID-19 lockdowns, has not only improved our operational
efficiency but also significantly reduced our contribution to
transportation-related emissions. We have also terminated our lease
on our traditional office space, further reducing our environmental
impact. We are committed to exploring further opportunities to
enhance our environmental performance and contribute to a
sustainable future.
Task Force on Climate-related Financial Disclosures (TCFD)
Since its inception, OCT has operated with a streamlined,
virtual-centric model, which inherently limits our direct
environmental footprint. We have neither acquired physical
facilities nor undertaken activities with notable environmental
implications, rendering our exposure to climate-related risks
minimal. However, as we chart our course beyond 2023, our
commitment is unwavering towards comprehending our environmental
footprint and crafting sustainability strategies over the
forthcoming 5 years, aptly suited to our operational size, and
taking steps to address the eleven TCFD recommendations with the
four thematic areas detailed below.
While limited in its environmental impact, our operational ethos
is underscored by a proactive approach to environmental
stewardship. Our core pursuits are anchored in drug research and
development. As of now, aside from our sustained drive to minimise
travel, no pronounced climate risks have surfaced.
Governance
Disclose the organisation's governance around climate-related
risks and opportunities.
a. Describe the board's oversight of climate-related risks and
opportunities
The Board actively recognises the significance of
climate-related risks and opportunities. While the Company does not
have a dedicated climate risk committee at present, the Board is
mindful that as the business grows there will be need to evaluate
how to practically and effectively incorporate the evaluation of
climate-related risks and opportunities within Board,
sub-committee, and management decision-making and reporting.
b. Describe management's role in assessing and managing
climate-related risks and opportunities.
OCT recognises that the management team has a crucial role in
the day-to-day assessment and management of climate-related risks
and opportunities. The Directors are aware that there will be a
need to explore ways to further to evaluate climate-related matters
within both the management's operational procedures and the broader
governance structure, including potential sub-committees and
reporting mechanisms.
Strategy
Disclose the actual and potential impacts of climate-related
risks and opportunities on the organisation's businesses, strategy,
and financial planning where such information is material.
a. Describe the climate-related risks and opportunities the
organisation has identified in the short, medium and long term.
In the short term, OCT's operational model presents minimal
direct climate-related risks. As OCT looks toward the medium and
long term, especially considering potential expansion, the Board
will actively identify opportunities to minimise OCT's carbon
footprint and enhance its positive impact on environmental
sustainability.
b. Describe the impact of climate related risks and
opportunities on the organisation's businesses, strategy and
financial planning.
OCT's remote-first approach has minimised its contribution to
transport-related emissions. Beyond the evident environmental
benefits, this decision also streamlines our operations,
potentially leading to financial efficiencies by reducing overheads
and bolstering productivity.
c. Describe the resilience of the organisation's strategy,
taking into consideration different climate-related scenarios,
including a 2degC-or-lower scenario.
OCT's strategy is inherently resilient, crafted to accommodate a
spectrum of climate-related scenarios. OCT's present operational
model intrinsically curtails its environmental impact, positioning
it favourably even under stringent climate scenarios, such as the
2degC-or-lower target. The Board is committed to reviewing and
refining its strategy in light of evolving climate-related insights
as it becomes appropriate to do so.
Risk Management
Disclose how the organisation identifies, assesses and manages
climate-related risks.
a. Describe the organisation's processes for identifying and
assessing climate-related risks.
OCT employs a rigorous risk management process, central to our
business operations. This involves a continuous cycle of
identifying, assessing, responding to, and monitoring risks,
including those related to climate. While climate change was not
highlighted as a principal risk for the fiscal year ending 30 April
2023, our comprehensive approach ensures that we remain vigilant to
emerging climate trends and their potential implications. We
identify risks from both bottom-up and top-down perspectives,
recording them in programme risk registers and conducting ad hoc
reviews as new risks emerge.
b. Describe the organisation's processes for managing
climate-related risks.
Once identified, we categorise and assess risks using a
business-wide scoring mechanism, considering both their likelihood
and potential impact. Risks that exceed our appetite or those that
present clear opportunities for reward are given special attention.
For such risks, mitigation strategies are developed, action plans
are drawn up, and responsibilities are assigned for their
implementation. Our transition to a remote-first working model, for
instance, was in part a strategic response to potential
climate-related risks associated with transportation emissions.
c. Describe how processes for identifying, assessing, and
managing climate-related risks are integrated into the
organisation's overall risk management.
The Board consistently reviews key risks, ensuring a
comprehensive approach that addresses both traditional and
climate-related challenges. The Executive Committee and Board is
updated with consolidated risk reports, enabling informed strategic
decisions. Our robust risk management involves the Board,
management, and staff, supported by solid policies and proactive
risk identification. As we progress, we'll adapt our strategies to
emerging climate insights, prioritising sustainability and
resilience.
Metrics & Targets
Disclose the metrics and targets used to assess and manage
relevant climate-related risks and opportunities where such
information is material.
a. Disclose the metrics used by the organisation to assess
climate-related risks and opportunities in line with its strategy
and risk-management process.
OCT recognises the importance of metrics in understanding and
managing its carbon footprint. Given our distinctive operational
model, where we neither own laboratories nor have a centralised
office, our direct environmental impact is inherently limited. We
monitor our operations to ensure alignment with best practices in
sustainability.
b. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3
greenhouse gas (GHG) emissions, and related risks.
Our Scope 1 and Scope 2 GHG emissions are minimal due to our
remote operational model. We are vigilant about potential Scope 3
emissions, ensuring that our broader supply chain also prioritises
environmental sustainability. While OCT is not currently subject to
GHG reporting requirements, we understand the need in the future as
it becomes relevant to assess our environmental impact and are
aware of the challenges in quantifying the complete carbon
footprint of our supply chain.
c. Describe the targets used by the organisation to manage
climate-related risks, opportunities and performance against
targets.
While we've already made progress in minimising our carbon
footprint, we intend to define clear targets for further reductions
when it becomes appropriate to do so. We commit to regularly
reviewing and reporting our performance against these targets in
annual disclosures, ensuring transparency and accountability.
In conclusion, OCT is deeply committed to a sustainable future,
continuously assessing its environmental impact and adapting its
strategies to ensure minimal carbon emissions, even as we consider
potential expansion in the future.
Social Responsibility
We are dedicated to creating a diverse and inclusive workplace
where everyone is treated with respect and dignity. We believe that
our commitment to social responsibility extends beyond our
organisation to the wider community. Further details of our
stakeholder engagement can be found in our s172 Statement.
Governance
We understand the importance of strong governance in maintaining
the trust of our stakeholders. We have implemented robust
governance structures and processes to ensure transparency,
accountability, and compliance with all relevant laws and
regulations. Our commitment to doing the right thing is reflected
in our zero-tolerance approach to bribery and corruption, as well
as our adherence to the professional codes of industry associations
including ABPI, AAALAC, AALAS, Bioindustry Association, CDP, DA4S,
NC3Rs and the Scottish Lifesciences Association. Further details of
our governance can be found in our Governance Report.
In conclusion, doing the right thing is at the heart of our
business. We are committed to acting with integrity, respecting the
environment, contributing positively to society, and maintaining
strong governance. We believe that this commitment will drive our
sustainable success and make a meaningful difference in the
world.
GOING CONCERN AND VIABILITY STATEMENT
Going Concern
The Directors have reviewed the Group's financial position for
the 12 months following the approval of these financial statements.
The Group's business activities, financial standing, and factors
likely to influence its future development, performance, and
position are detailed in the CEO's Review and Financial Review.
(a) Principal Risks Assessment
The Group's capital management objectives, policies, and
processes, financial risk management objectives, financial assets
and liabilities details, and its exposure to credit and liquidity
risks are elaborated in notes 20 and 21 of the financial
statements.
(b) Trading Results, Future Trading Forecasts, and Financial Scenario Modelling Review
The Group prepares budgets and cash flow forecasts to ensure it
can meet its liabilities as they fall due, with stringent controls
in place to manage cash going forward. However, the Directors have
identified a material uncertainty that may cast significant doubt
on the Group's ability to continue as a going concern without
raising additional funds. The Group's cash runway extends only 8
months beyond the signing of these accounts, assuming that the
planned programme research remains unchanged. Therefore, the Group
may be unable to realise its assets and discharge its liabilities
in the normal course of business.
(c) Funding and Cash Reserves
The Board is planning for the next round of funding, previously
signalled, to support our current drug development programmes
through to their next stage of development and key value inflexion
points. Cash remains well-managed with the next round of
fundraising due to take place by the end of Q4 2023, market
permitting. In the absence of, or delay in obtaining any further
debt or equity funding, the existing cash funds will be fully
utilised by April 2024.
(d) Results of Scenario Testing
The uncertainty as to the future impact on the Group of the
ongoing global situation has been considered as part of the Group's
adoption of the going concern basis. The Directors are confident
that the Group is working in alignment with the development plan.
Several key partners have been onboarded and drug development work
continues in earnest, with Programme 1 (OCT461201) having started
its clinical trial in Q2 2023.
(e) Conclusion on Going Concern
After considering the Group's current financial position, the
Directors have concluded that there is a reasonable expectation
that the Group has adequate resources to continue its operational
existence for the foreseeable future. This conclusion is based on
the Group's current cash position, the planned future fundraising,
and the ongoing development of its drug discovery programmes.
However, it is acknowledged that the Group's ability to continue
as a going concern is dependent on successful future fundraising
and the progression of its drug development programmes. The
Directors are actively managing these risks and uncertainties and
are confident in the Group's ability to raise the necessary funds
and progress its drug development programmes as planned.
Therefore, the financial statements have been prepared on a
going concern basis, which contemplates the continuity of normal
business activities and the settlement of liabilities in the
ordinary course of business.
The Directors will continue to monitor the Group's going concern
status, particularly in light of the ongoing global situation and
its potential impact on the Group's operations and financial
position. They are committed to taking appropriate actions as
necessary to ensure the continued viability of the Group.
Long-term Prospects and Viability
(f) Assessment of Long-term Prospects
The Directors have assessed the prospects of the Company over a
longer period than the 12 months minimum required by the 'Going
Concern' provision. The Directors anticipate the regulatory
approval of the first drug produced by OCT in 2027. This milestone
will mark a significant shift in the Group's financial position and
is a key factor in the Directors' assessment of the Group's
viability. The Group's strategy is well documented and , in
addition to Programme 1 which is in clinical trials, includes
medium-term targets of developing Programmes 2, 3 and 4, each
targeting different therapeutic areas and each at different stages
of development. The Group currently generates no revenue and relies
on its cash reserves and future fund-raising exercises to fund its
clinical trials.
(g) Current Position
The Group's current position is characterised by a strong focus
on drug development, with several key partners onboarded and drug
development work continuing in earnest, supported by the Group's
current financial position of GBP2,297k cash in the bank as of 30
April 2023. The Group's cash runway extends 8 months beyond the
signing of these accounts, assuming that the planned programme
research remains unchanged. Therefore, the Group may be unable to
continue its research and discharge its liabilities in the normal
course of business. However, the Board is planning for the next
round of funding, previously signalled, to support our current drug
development programmes through to their next stage of development
and key value inflexion points.
(h) Strategy and Business Model
The Group's strategy involves the development of Programme 1
(OCT461201), a patent-protected new chemical entity targeting CIPN
and IBS and Programme 2 (OCT130401), which is the development of
synthetic pCBs for the effective, safe, and non-addictive treatment
of chronic and severe pain conditions. The Group is also working on
expanding its portfolio with the development of Programmes 3 and 4,
which involve screening an expanded library of cannabinoid
derivatives with the aim of targeting multiple therapeutic areas,
including pain, neurology, immune-inflammation, and oncology.
(i) Robust Assessment of Principal Risks
The Group is faced with several principal risks, including the
potential failure of significant drug development programmes , the
inability to secure additional funding, and the ongoing global
situation. To manage these risks, the Group has set clear
objectives and policies and has implemented processes for managing
its capital and financial risk. Detailed information about the
Group's financial assets and liabilities, as well as its exposure
to credit risk and liquidity risk, can be found in note 20 of the
financial statements. The Group also prepares budgets and cash flow
forecasts to ensure it can meet its liabilities as they fall due
and has strict controls in place to manage cash effectively.
Despite the risks and uncertainties, the Directors are actively
managing these issues and remain confident in the Group's ability
to secure the necessary funds and advance its drug development
programmes as planned.
(j) Assessment of Viability
The Directors have acknowledged a significant uncertainty that
may impact the Group's sustainability, but they are confident in
the Group's alignment with the development plan. They have
successfully partnered with key stakeholders, and the Group is
actively engaged in drug development, with a clinical trial for
OCT461201 commenced in Q2 2023. It is important to note that the
Group's viability does not solely rely on the success of a single
drug development programme . The Group has a library of almost 500
proprietary cannabinoid derivatives, which serves as a robust
pipeline for future development.
Furthermore, the Group's long-term viability is supported by its
broader drug development lifecycle, which includes Programmes 2, 3,
and 4. These programmes offer potential future value for the Group
and are at different stages of development, targeting various
therapeutic areas. The diversification of these programmes helps
mitigate the risks associated with any single drug development
project and provides multiple opportunities for future success.
(k) Time Period and Scenario Modelling
The time horizon for the viability assessment extends to 2027,
which is when the Directors anticipate that Programme 1 will
achieve regulatory approval. Scenario modelling includes potential
adverse or unsatisfactory results from clinical trials resulting in
programmes being terminated and lack of equity raising. However,
the Group's viability is not solely dependent on the success of a
single drug development programme but is supported by a library of
almost 500 proprietary cannabinoid derivatives, providing a robust
pipeline for future development.
(l) Results of Scenario Testing
Our viability testing takes into account the potential impact of
significant failures in drug development. While such failures could
pose challenges, they do not fundamentally alter the Company's
overall drug development potential. This is due to the robustness
of our portfolio, providing a range of opportunities for discovery
and development.
While a failure in a particular drug development programme could
have specific negative impacts, it does not change the overall
outcome of the viability testing. This is because the Group has
multiple strategies in place to generate additional capital if
needed. These strategies include the potential sale of existing
programmes in the current drug development portfolio, licensing of
intellectual property rights, raising equity financing in the
public markets, or exploring other private financing options. These
measures provide the Group with a degree of resilience and
flexibility, enabling it to navigate potential challenges and
continue its operations even in the face of adverse outcomes in
specific drug development programmes.
(m) Conclusion on Viability
Based on the results of this analysis, the Directors have a
reasonable expectation that the Group will be able to continue in
operation and meet its obligations as they fall due over the period
to 2027. This conclusion is based on the Group's current cash
position, the planned future fundraising, the ongoing development
of its drug discovery programmes, and the robustness of its
cannabinoid library. However, it is acknowledged that the Group's
viability is dependent on successful future fundraising, the
progression of its drug development programmes, and the management
of principal risks. The Directors will continue to monitor the
Group's viability status, particularly in light of the ongoing
global political, economic, social, technological, legal and
environmental situation and its potential impact on the Group's
operations and financial position. They are committed to taking
appropriate actions as necessary to ensure the continued viability
of the Group.
Other Directors' statements
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors'
Report, Strategic Report, Directors' Remuneration Report and the
financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare Group and Company
financial statements for each financial year. The Directors are
also required to prepare Group financial statements in accordance
with UK adopted International Accounting Standards under the
Listing Rules of the Financial Conduct Authority for companies
trading on the Main Market. Under the Listing Rules, the Directors
have also elected to prepare the Company financial statements in
accordance with UK adopted International Accounting Standards.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs and profit or loss of the Group and
Company for that period. In preparing the Group and Company
financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with UK
adopted International Accounting Standards and;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the
Company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable
them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Group and the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
Website publication
The Directors are responsible for ensuring the Annual Report and
the financial statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Report review process for the Annual Report
The consolidated financial statements are drafted by appropriate
members of the reporting and leadership teams and co-ordinated by
the Finance Director to ensure consistency. A series of planned
reviews is undertaken by the reporting team and Executive
Directors. In advance of final consideration by the Board, they are
reviewed by the Audit Committee.
The Board's review of the system of internal control
The Board is responsible for the Group's overall approach to
risk management and internal control and has reviewed the Group's
risk management and internal controls systems for the period 1 May
2022 to the date of the Annual Report and Financial Statements and
is satisfied that they are effective.
Section 172(1) statement
The Board reviews all matters and decisions through the
consideration and discussion of reports which are sent in advance
of each of their meetings and through presentations to the Board.
When the Directors discharge their duty as set out in section 172
of the Companies Act 2006 ('section 172' or 's.172').
The Directors are required to include a statement of how they
have had regard to stakeholders and the other factors set out in
section 172(1)(a) to (f) when performing their duty. The full
s.172(1) statement contains examples of how the Directors have had
regard to the matters in s.172(1)(a) to (f) when engaging with
stakeholders.
Disclosure of information to the Auditor
The Directors who held office at the date of approval of this
Report of Directors confirm that so far as each Director is
aware:
-- there is no relevant audit information of which the Company's auditor is unaware; and
-- the Directors have taken all steps that they ought to have
taken as Directors to make themselves aware of any relevant audit
information and to establish that the auditor is aware of that
information.
Future developments
The Directors consider that the continued investment in the
development of the Group's four core development programmes will
allow the business to obtain regulatory approval for its first
programme during 2027. Continued progress towards Phase I clinical
trials for two of the four drug development programmes post year
end provide further assurance to the Board that the Group is on
target to deliver the key stages in the four programmes as outlined
in the Chair's Statement and the Strategic Report.
Directors' responsibility statement
The Directors whose names and functions towards the end of the
Annual Report and Accounts confirm to the best of their
knowledge:
-- the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Group and Company, and the undertakings included in the
consolidation taken as a whole;
-- the Management Report which comprises the CEO's Review, the
CSO's Review, the Financial Review and the Principal Risk Section
of the Annual Report and Accounts includes a fair review of the
development and performance of the business and the position of the
Group and Company and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties they face; and
-- the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Group's performance, business model
and strategy.
The Company takes responsibility for all of the information
drawn up and made public in the Annual Report and Accounts.
This responsibility statement was approved by the Board of
Directors and is signed on its behalf by:
Clarissa Sowemimo-Coker Paul Smalley
Chief Executive Officer Finance Director
Governance report - HOW WE PRESERVE VALUE
Corporate governance report
"Our journey so far has been marked by significant milestones
and achievements, and we are poised to continue this trajectory
with renewed vigour and determination. Our focus remains on
harnessing the power of cannabinoid medicines to make a meaningful
difference in the lives of patients."
Introduction
In line with the Chair's statement at the beginning of the
Annual Report, we at OCT are committed to upholding the highest
standards of integrity and trustworthiness in the modern business
world. These principles are the bedrock of our corporate governance
practices. I am pleased to be part of a Board that is not only
highly experienced and high-performing but also dedicated to
achieving the best outcomes for all our stakeholders. Our Chair,
Julie Pomeroy, has expressed pride and optimism in her statement,
highlighting our transition from a pre-clinical to a clinical-stage
pharmaceutical company, a testament to our team's dedication and
expertise.
Strategic Initiatives
Our strategic initiatives are designed to align with our mission
and business objectives. They encompass a range of activities,
including research and development, partnerships and
collaborations, and financial strategies. These initiatives are
crucial in driving our growth, enhancing our competitiveness, and
ensuring we deliver on our commitment to our stakeholders.
Stronger Governance
As a pre-revenue company, our focus has been on programme and
risk management together with cash flow management. These aspects
are deeply embedded in our culture and are the first items on the
agenda at all Board meetings. Our commitment to these areas has
been instrumental in navigating the complexities of the
pharmaceutical industry and achieving our operational targets.
Financial Governance
Our financial governance practices are designed to ensure the
effective management and control of our financial resources. This
includes the development and implementation of financial policies
and procedures, budgeting and forecasting, financial risk
management, and compliance with relevant financial regulations and
standards.
Stakeholder Engagement
Our stakeholder engagement practices are aimed at building and
maintaining strong relationships with all our stakeholders,
including our shareholders, employees, partners, and the
communities in which we operate. We believe in open and transparent
communication and actively seek feedback from our stakeholders to
inform our decision-making and strategic planning processes. We
utilise a variety of different methods to engage our stakeholders
including: in-person and virtual meetings; site visits; broadcast
investor updates with interactive Q&A sessions; video
interviews; podcasts; and other social media channels where we
operate and monitor #AskOCT as a direct line of communication to
the Company.
Conclusion
As we look to the future, we are filled with optimism. Our
journey so far has been marked by significant milestones and
achievements, and we are poised to continue this trajectory with
renewed vigour and determination. Our focus remains on harnessing
the power of cannabinoid medicines to make a meaningful difference
in the lives of patients. We will continue to innovate,
collaborate, and uphold the highest standards of corporate
governance. Together, we have the power to change lives and shape
the future of cannabinoid medicine.
Rob Bennett
General Counsel and Company Secretary
BOARD OF DIRECTORS
Board meeting attendance
Julie Pomeroy (Chair) (10/10)
Richard Hathaway (9/10) [1]
Paul Smalley (6/6) Appointed 17 October 2022
Karen Lowe (4/4) Resigned 17 October 2022
John Lucas (5/5) Resigned 2 December 2022
Cheryl Dhillon (10/10)
Bishrut Mukherjee (8/10) [2]
Clarissa Sowemimo-Coker (10/10)
Neil Mahapatra (10/10)
Board of Directors
Julie Pomeroy
Age:67
Chair
Appointed to the Board: 2021
Contribution to the long-term sustainable success of the
Company
Julie brings over 20 years' experience as a plc Board director
and accordingly she has an in-depth knowledge of UK listed
companies and the corporate governance standards required for such
companies. She is a Chartered Accountant and a Chartered Director.
She was Finance Director and Company Secretary of AIM listed
Dillistone Group Plc for over 10 years and brings strong finance
credentials to the Company. Julie has also had over 10 years'
experience as a non - executive director of various NHS
organisations where she has chaired or been a member of their audit
committees.
Other public appointments:
Dillistone Group plc
Committee : Audit (Chair), Remuneration, and Nomination
Clarissa Sowemimo-Coker
Age:42
Chief Executive Officer
Appointed to the Board: 2021
Contribution to the long-term sustainable success of the
Company
Clarissa's multi-sector professional experience in law,
compliance, operations, and investor relations are essential to the
long-term sustainable success of OCT. She has over 15 years'
experience in the legal and regulatory field and is a qualified
solicitor in England and Wales. She has a strong governance
background and a proven track record of implementing compliance
programmes to help companies meet their legal and regulatory
obligations. Clarissa is a strong leader and communicator with an
entrepreneurial mindset. She is able to build relationships with
shareholders, motivate teams, and clearly articulate the Company's
vision and strategy. She is committed to ensuring OCT is a diverse
and inclusive workplace, which will be essential to its long-term
success.
Other public appointments:
None
Cheryl Dhillon
Age: 64
Senior Independent Director
Appointed to the Board: 2021
Contribution to the long-term sustainable success of the
Company
Cheryl has over 30 years' pharmaceutical industry experience
spanning across companies from start up to large global enterprises
in positions ranging from SVP of Finance to CEO. Her skill set
encompasses hands on management of many of the functions critical
to successful development and commercialisation of specialty
pharmaceutical products, particularly into EU markets. Since taking
semi-retirement in 2020, she has focused her expertise helping
innovative healthcare related companies at Board level. Along with
being a Fellow of ACCA she has an MBA from University of
Hertfordshire specialising in strategy and has a coaching
qualification from the University of Strathclyde.
Other public appointments:
None
Committee: Audit, Remuneration (Chair), and Nominations
(Chair)
Richard Hathaway
Age: 56
Non-Executive Director
Appointed to the Board: 2022
Contribution to the long-term sustainable success of the
Company
Richard brings a breadth of financial experience as a former
adviser to a range of international businesses, both public and
private, across a range of sectors, as well as from his senior
finance and corporate development roles at Imperial Brands. In
particular, he has extensive transactions, financing and capital
raising experience that is highly relevant to OCT as it pursues
further investment rounds to support the delivery of its strategy.
As a former auditor of a wide range of UK listed companies and
former head of risk management at Imperial, he also contributes
extensive corporate governance experience. He is a Chartered
Accountant with extensive recent and relevant financial
experience.
Other public appointments:
Compania de Distribucion Integral Logista Holdings SA
Committee: Audit.
Neil Mahapatra
Age: 43
Non-Executive Director
Appointed to the Board: 2021
Contribution to the long-term sustainable success of the
Company
As a co-founder of OCT, Neil brings to bear valuable executive
leadership and a proven ability to cultivate companies with robust
growth potential. His deep understanding of the cannabinoid sector,
enriched by his considerable expertise in managing investor
relations, contributes significantly to the strategic depth of the
Company . His achievements include the establishment of the
influential investment firm, Kingsley Capital Partners (KCP), and
the initiation of the ground-breaking 'End our Pain' campaign, a
testament to his strategic acumen and forward-thinking approach. In
addition, his diverse portfolio of experience and impactful
contributions, which range from healthcare corporate finance to
private equity, underline his role in promoting the long-term
sustainable success of the Company.
Other public appointments:
Odyssean Investment Trust plc .
Committee: None
Paul Smalley
Age: 49
Finance Director
Appointed to the Board: 2022
Contribution to the long-term sustainable success of the
Company
Paul brings more than 25 years' UK and international financial
experience to the Board including strategic management capabilities
gained across a wide range of market sectors, with expertise
extending to IT, HR and procurement. Most recently he was the
Finance Director and Company Secretary of Panthera Biopartners Ltd,
a clinical trials management company overseeing financial,
operational and treasury management, as well as assisting with
mergers and acquisitions.
Paul has worked in a variety of organisations, from SMEs to
quoted companies including as Finance Director of JOST UK Ltd,
which was a UK subsidiary of JOST Werke AG, a company quoted on the
Frankfurt Stock Exchange.
Paul holds a BA in Accounting and Finance from Lancaster
University and is also a chartered global management accountant and
Chartered Management Accountant .
Other public appointments:
None
Committee: None
Bishrut Mukherjee
Age: 35
Appointed to the Board: 2021
Contribution to the long-term sustainable success of the
Company
Bishrut has a wide range of experience within operational
delivery, M&A, corporate venturing and Innovation, principally
across regulated industries including those of pharmaceuticals,
manufacturing, energy, and FMCG. Bishrut's background in business
development and operations leadership is valuable to the company as
it reviews new opportunities and looks to deliver its drug
candidate pipeline. He is a Chartered Engineer and has an MBA from
London Business School.
Other public appointments:
None
Committee: Remuneration and Nominations
Executive Committee and Company Secretary
Clarissa Sowemimo-Coker
Chief Executive Officer
Details above
Paul Smalley
Finance Director
Details above
Dr. Valentino Parravicini
Chief Scientific Officer
Appointed:
Dr. Valentino Parravicini was appointed as the Chief Scientific
Officer of OCT in July 2020.
Contribution to the long-term sustainable success of the
Company
Dr. Parravicini brings a distinguished career in oncology,
inflammation, and immunology to OCT. His extensive experience
leading groundbreaking projects and his award-winning work in
pharma and biotech are significant assets to the Company.
As Chief Scientific Officer, Dr. Parravicini oversees all of
OCT's ongoing drug discovery and development studies, including the
pre-clinical development of OCT461201, the Company's lead CB2
agonist. His role involves close collaboration with OCT's lead
business and research partners, as well as the development of new
research partnerships globally. His expertise and leadership are
helping to advance OCT's objective to become a global leader in
developing cannabinoid-based prescription medicine.
Dr. Tim Corn
Chief Medical Officer
Appointed:
Dr. Tim Corn was appointed as the Chief Medical Officer of OCT
in June 2023.
Contribution to the long-term sustainable success of the
Company
Dr. Corn brings a wealth of experience from his previous senior
roles in various pharmaceutical organisations , including Jazz
Pharmaceuticals, EUSA Pharma Inc and Confo Therapeutics SA. His
extensive knowledge of the regulatory environment and his track
record of contributing to over twenty regulatory approvals in the
US and Europe are invaluable assets to OCT.
In his role as Chief Medical Officer, Dr. Corn is responsible
for overseeing OCT's clinical research and development activities.
His guidance and advice are crucial as OCT navigates through all
stages of clinical development towards commercialisation, further
strengthening the senior team and validating the Company's vision
for future growth.
Rob Bennett
General Counsel and Company Secretary
Appointed:
Rob joined OCT as General Counsel in December 2022 and was
appointed Company Secretary on 12 January 2023.
Contribution to the long-term sustainable success of the
Company
Rob Bennett brings over 15 years of UK and international
experience across multiple sectors, including retail, fast-moving
consumer goods, manufacturing, innovation, and FinTech. His
expertise in legal, risk, and compliance, honed through senior
roles at listed and large private companies, including General
Counsel and Company Secretary roles, is a significant asset to
OCT.
As General Counsel and Company Secretary , Rob plays a pivotal
role in OCT's operations. His expertise in mergers and
acquisitions, coupled with his recognition in Legal 500's GC
Powerlists in 2021 and 2022, underscores his value to the team. In
his role, Rob serves as the link between the Executive Committee
and the Board, managing a number of external stakeholder
relationships. He heads the legal function and oversees corporate
governance responsibilities. His international experience and legal
knowledge are crucial to OCT's growth and long-term success.
KEY ACTIVITIES OF THE BOARD DURING 2022/23
(a) Overview
The Board of OCT convened 10 times during the year, including
the Annual General Meeting. Additional meetings were organised as
necessary to ensure the Board could effectively fulfil its
responsibilities. At each meeting, the Board received strategic,
operational, and financial updates from the CEO, CFO and CSO. The
Board also considered aspects of Group culture and strategy at
various points during the year.
(b) Drug Development and Clinical Trials
In March 2022, OCT signed a five-year Master Service Agreement
with Benuvia Manufacturing Inc. for OCT 130401, OCT's drug-device
combination for the treatment of TN.
In July 2022, OCT entered into a Master Service Agreement and
Work Order with Simbec Research Limited for its first-in-human
Phase I clinical trial for its lead compound, OCT461201, that
commenced in Q2 2023.
In January 2023, OCT submitted a combined clinical trials
application for its lead programme, OCT461201, to the MHRA ) and
REC 2 .
In May 2023, OCT received approval from the MHRA and REC 2 for
the combined Phase I clinical trial application for OCT461201.
(c) Strategic Objectives and Financing
The Board received ongoing updates from the Executive Directors
and CSO on the implementation of strategy throughout the year.
(d) Risk Management and Internal Control
The Board initiated a root and branch review of the risk
management and internal controls.
The Board made the strategic decision to pause the clinical
phase of OCT130401 in order to extend the cash runway.
The Board routinely considered its conflict of interests.
The Board received an update on Cyber & IT Security.
The Board reviewed the compliance training completion rates.
(e) Corporate Reporting and Performance Monitoring
The Board reviewed the rolling forecasts and approved the 2023
budget.
The Board approved the year-end and interim results.
The Board approved monthly business updates.
The Board reviewed the 2022 Report & Accounts to ensure it
is fair, balanced, and understandable.
(f) Stakeholder Engagement
The Board hosted the Annual General Meeting (AGM) on 28
September 2022.
The Board received updates on our investor engagement programmes
and regular investor relations activity.
Employee engagement was another significant focus for the Board
during the year. We are proud to have been recognised in The Sunday
Times Best Places to Work in 2023 and Living Wage accreditation, a
testament to our efforts in creating a supportive and engaging work
environment.
(g) Governance
The Board performed an evaluation of the Board's effectiveness,
led by the Chair and internally facilitated by the Company
Secretary.
The Board received regular governance updates from the Company
Secretary.
The Board reviewed OCT's vision, purpose, and values.
The Board reviewed Executive Team succession planning.
In addition to the matters listed, the Board received
governance, legal, and regulatory updates at regular intervals from
the Company Secretary and the Board's advisers . Risk remains a
matter reserved for the Board, and a detailed review of our risk
management processes and principal risks was conducted. There have
been no reports to our whistleblowing helpline.
Section 172(1) statement
Our Directors, in accordance with the Companies Act 2006 (the
Act), are committed to fostering the success of OCT for the
collective benefit of our shareholders, while also considering our
other key stakeholders. We firmly believe that to advance our
strategy and achieve enduring success, the Board must take into
account all relevant stakeholders in decision-making and ensure
that every decision aligns with our culture of 'doing the right
thing'.
The challenge lies in balancing the competing priorities of
stakeholders, as it is not always feasible to yield positive
outcomes for all. Our stakeholder engagement provides our Board
with a deep understanding of stakeholder concerns, enabling them to
carefully weigh all relevant factors and select the course of
action that best fosters high standards of business conduct and the
long-term success of OCT. The principles of s.172 are not merely
considerations at the Board level; they are ingrained in our
culture and influence all our company activities.
The diverse interests of stakeholders are taken into account in
the business decisions we make across the Company, at all levels.
This is reinforced by our Board setting the right tone from the
top. All significant decisions by the Board are subject to a s.172
evaluation to identify the likely long-term consequences of any
decision and the impact of the decision on our stakeholders.
In carrying out their duties during 2022-2023, the Directors
have considered the matters set out in s.172 of the Act.
In performing their duties during 2022-2023, the Directors have
acted in a way they considered, in good faith, would be most likely
to promote the success of the Company for the benefit of its
members as a whole. In doing this, they have had regard (amongst
other matters) to:
(a) The likely consequences of any decisions in the long term:
The Board has made strategic decisions to advance the Company's
lead compound, OCT461201, into clinical trials, a significant
milestone for the Company. This compound has shown potential as an
effective therapy for CIPN and IBS. The decision to advance into
clinical trials is a significant step towards achieving our core
aim of providing a much-needed safe and effective treatment for
patients, while also generating value for shareholders.
Like all early-stage drug discovery businesses, this process is
complex. Each phase of clinical trials brings us closer to
commercialisation, reducing failure risk and increasing shareholder
value. While the benefits of today's decisions may not be
immediately apparent, we are confident that our strategic choices
will yield significant future rewards.
(b) The interests of the Company's employees:
The Board recognises the importance of employee engagement and
the significant contributions made by all employees to the
Company's ongoing success. We have maintained open lines of
communication with our employees through regular 'all hands'
meetings and updates, fostering a positive and supportive work
environment. Our commitment to employee engagement and creating a
conducive work environment was recognised when OCT was listed in
The Sunday Times Best Places to Work 2023.
In response to the evolving work environment, we have adopted a
'remote-first' approach, offering flexible work arrangements such
as remote working. This approach contributes to a better work-life
balance for our employees and is a testament to our adaptability.
Despite being a fully remote company, we are mindful of the need to
nurture the Company's culture. Therefore, we ensure that we make
time for in-person engagement, regularly convening at shared office
spaces for face-to-face interaction and team building.
We also respect individual preferences and circumstances,
understanding that the ability to work from home is a privilege not
available to all. To support all team members, we provide access to
coworking spaces for those who prefer this arrangement, ensuring
they have the resources they need to thrive in their roles.
In addition to these flexible work arrangements, OCT is
committed to the continuous development of its workforce. We offer
regular training opportunities, ensuring that employees have the
skills and knowledge necessary to excel in their roles. In the
relevant period, Paul Smalley completed his ESG (Environmental,
Social, and Governance) certification, reinforcing our commitment
to sustainable and responsible operations.
The Board is pleased with the consistent progress and the fact
that we remain on track to meet our financial and operational
targets. This achievement is a testament to the adaptability,
skill, and 'can do' attitude of our team, which has been further
enhanced by our flexible and inclusive work environment.
(c) The need to foster the Company's business relationships with
suppliers, customers, and others:
The Board, through its digital-first approach, has empowered the
Executive Team to cultivate strategic alliances with a variety of
suppliers. This strategy has led to the establishment of robust
relationships with a broad spectrum of businesses, propelling our
drug development process significantly forward. Key partners, such
as Aptuit (Verona) SRL, part of Evotec SE, and Simbec Research
Limited, part of Simbec-Orion Group Ltd, have played instrumental
roles in the progression of our first-in-human Phase I clinical
trial. These partnerships, fortified by our digital-first strategy,
are indispensable for the successful advancement of our drug
candidates.
In addition to fostering relationships with partners, OCT has
built strong connections with all its suppliers, including Simbec
Research Limited, Evotec, ProPharma Group, Charles River, and
Dalriada Drug Discovery. This has been achieved through regular
communication and update meetings, as well as site visits and
in-person meetings where appropriate. This open dialogue has
enabled us to promptly address any concerns and collaboratively
find solutions that are mutually beneficial.
Furthermore, OCT has proactively engaged with regulators to
ensure our operations meet all necessary standards. We have worked
closely with the MHRA during the filing of our first Clinical Trial
Application (CTA), tailoring our strategy to meet the MHRA's
specific requirements for a successful submission. We have
maintained a transparent and open dialogue with the MHRA, promptly
addressing any queries or concerns they may have. As one of the few
companies licensed to possess and supply class one substances under
the Misuse of Drugs Act 1971, we have also continued our engagement
with the Home Office, including conducting an in-person site visit
to the licensed premises as part of the successful license renewal
process.
Our digital-first strategy not only optimises our operations but
also enhances communication efficiency with our partners and
regulators. This approach bolsters our collaborative efforts and
innovation in our shared mission of healthcare advancement. These
relationships and engagements are vital in fostering the Company's
business relationships with suppliers, customers, and others,
contributing to the long-term success of OCT.
(d) The impact of the Company's operations on the community and the environment
The Board acknowledges our significant role within the community
and the broader implications of our operations. We are dedicated to
conducting our business responsibly and sustainably. In line with
this commitment, we made a strategic decision in October 2021 to
transition to a fully remote business model, terminating the lease
on our head office.
Adopting a remote-first approach has not only transformed the
way we work but has also significantly reduced our carbon
footprint. By minimising commuting, we have lessened our
contribution to transportation-related emissions, demonstrating our
commitment to environmental stewardship.
Furthermore, our digital-first strategy has enabled us to reduce
the environmental impact associated with paper usage and printing.
By leveraging digital tools and platforms for our operations, we
are minimising waste and promoting sustainability.
These strategic decisions reflect our dedication to reducing our
environmental impact, contributing positively to our community, and
leading by example in sustainable business practices.
(e) The desirability of the Company maintaining a reputation for
high standards of business conduct:
The Board is steadfast in its commitment to uphold high
standards of business conduct. As part of this commitment, we have
voluntarily adopted the UK Corporate Governance Code, a step up
from the QCA Code. This move signifies our dedication to adhere to
a significantly higher standard of corporate governance, reflecting
our belief in the importance of good governance for the successful
and ethical operation of our business.
During the relevant period and whilst in her roles as Company
Secretary, Clarissa Sowemimo-Coker completed the Corporate
Governance Diploma, further enhancing our governance capabilities
and demonstrating our commitment to continuous learning and
improvement in this critical area.
In addition, we have undertaken a comprehensive 'root and
branch' risk review. This rigorous process allows us to identify,
assess, mitigate, and control risks across our business, ensuring
we are well-prepared to navigate any challenges that may arise.
We have implemented robust governance structures and processes,
ensuring that we operate in a transparent, ethical, and responsible
manner. Our adherence to these high standards of business conduct
not only enhances our reputation but also contributes to our
long-term success and sustainability.
(f) The need to act fairly between members of the Company:
The Board is deeply committed to equitable treatment of all
Company members, with a focus on open and transparent communication
with our shareholders, ensuring that their interests are always at
the forefront of our decisions.
In August 2022, when we made the strategic decision to pause the
clinical phase of OCT130401, we made sure to extensively engage
with our shareholders. We collected their views and feedback
through consultations with shareholders and took them into serious
consideration, demonstrating our commitment to an inclusive and
respectful decision-making process.
Our CEO, Clarissa, and CSO, Valentino, have been actively
engaging with shareholders in a variety of ways, including
in-person and virtual meetings, regular podcasts, and recorded
visual interviews with Proactive Investor, StockBox and Investor
Meet Company. They have also been attending and speaking at
numerous conferences and releasing articles to keep shareholders
updated on the Company's progress. These efforts ensure that our
shareholders are kept informed of developments and that their
voices are heard.
In all our actions, we strive to uphold the principles of
corporate governance: fairness, accountability, transparency, and
responsibility. This commitment guides our interactions with
shareholders and shapes our approach to conducting business,
reinforcing our dedication to acting fairly between all members of
the Company.
This approach to stakeholder engagement has enabled us to make
balanced and informed decisions that promote the long-term success
of OCT. We will continue to engage with our stakeholders in this
manner in the future.
Our stakeholder engagement approach, which emphasises open
communication and active feedback, has been key in making balanced
decisions that foster OCT's long-term success. The Board is
confident that these actions have bolstered OCT's sustainability
and success. We will persist in this approach, continuing to
consider the matters set out in Section 172(1)(a) to (f) of the Act
in all future decisions, ensuring our actions align with the
interests of our shareholders, employees, suppliers, customers, and
the communities we impact.
2018 UK Corporate Governance Code: application and
compliance
The Financial Reporting Council (FRC) released the latest
version of the UK Corporate Governance Code (referred to as the
'Code') in 2018. A copy of the Code can be accessed via
www.frc.org.uk . This Code is applicable to accounting periods
commencing on or after 1 January 2019. We are delighted to announce
that our Company has successfully applied all the Principles of the
Code throughout the relevant period. The following summary provides
an overview of how we have achieved this application.
Section 1: Board leadership and company purpose
(a) A successful company is led by an effective and
entrepreneurial board, whose role is to promote the long-term
sustainable success of the company, generating value for
shareholders and contributing to wider society.
The Board of OCT promotes the long-term sustainable success of
the Group and Company by maintaining oversight of the delivery of
the Group's strategy, aiming to generate shareholder value and
contribute to wider society. The Board has a diverse range of
skills, knowledge, and experience, and exercises independent and
objective judgment. They also recognise that as the programmes move
closer to commercialisation, the required skill set of the Board
will change. The Board and Committees meet regularly to ensure that
the strategy is delivered and that risks are effectively
managed.
(b) The board should establish the company's purpose, values and
strategy, and satisfy itself that these and its culture are
aligned. All directors must act with integrity, lead by example and
promote the desired culture.
OCT has a clearly defined purpose, which is to develop
cannabinoid-based medicines with the aim of improving the quality
of life for patients with unmet medical needs. The Board of OCT
plays a pivotal role in establishing the Company's purpose, values,
and strategy. It is responsible for setting the strategy and key
policies, ensuring robust corporate governance, and monitoring
progress towards the achievement of objectives and plans. The Board
is also vigilant in ensuring that OCT's unique culture is aligned
with its purpose, values, and strategy.
Furthermore, the Board places significant emphasis on workforce
engagement as an integral part of its agenda. It recognises that
the workforce is a critical stakeholder, and engaging with them is
vital for the Company's success. The methods and mechanisms through
which the Board engages with the workforce are detailed in the
Nominations Committee report.
The strategy of OCT is subject to regular review by the Board,
at least twice per year, to ensure that it remains relevant and
effective in guiding the Company towards its goals. Additionally,
the Company's culture, values, and ethics are documented and can be
found in the strategic report section.
This structured approach ensures that the Company remains
focused on its core purpose while aligning its culture and values
with its strategic objectives. Through regular reviews and
engagement with the workforce, the Board ensures that the Company
is adaptable and responsive to the evolving needs of its
stakeholders and the market.
(c) The board should ensure that the necessary resources are in
place for the company to meet its objectives and measure
performance against them. The board should also establish a
framework of prudent and effective controls, which enable risk to
be assessed and managed.
OCT takes a proactive and comprehensive approach to ensure that
the Company has the necessary resources in place to meet its
objectives and to measure its performance against these objectives.
This includes not only financial resources but also human capital
and expertise. For instance, OCT has established an SAB, which
brings in additional expertise and insights that are crucial for
the Company's focus on developing cannabinoid-based medicines.
Recognising the risks associated with having a small management
team, the Board has plans to expand resources, particularly as the
Company's programmes progress towards clinical trials. This is
indicative of the Board's forward-looking approach in resource
planning, ensuring that the Company is well-prepared to handle the
increasing complexities and demands as it grows.
In addition to resource allocation, the Board places a strong
emphasis on establishing a robust framework of controls. The Audit
Committee, a sub-committee of the Board, plays a significant role
in this regard. The Committee reviews and assesses the Company's
risk management processes, including the identification and
management of principal and emerging risks. The Committee is also
provided with information on front-line controls and receives
assurance from the external auditor.
Key Performance Indicators (KPIs) are used to measure the
Company's performance against its objectives. Information on the
KPIs and the Company's performance against them can be found in the
Financial Review.
Furthermore, the Audit Committee report includes a summary of
the internal control framework, highlighting the mechanisms in
place to ensure that the Company's operations are aligned with its
strategy and objectives.
(d) In order for the company to meet its responsibilities to
shareholders and stakeholders, the board should ensure effective
engagement with, and encourage participation from, these
parties.
OCT acknowledges the significance of maintaining an active and
effective engagement with its shareholders and a broader group of
stakeholders. The Board of OCT is cognisant of the diverse
interests and concerns of its stakeholders and actively engages
with them on a regular basis.
The Company has a broad group of clearly defined stakeholders,
which may include shareholders, employees, customers, suppliers,
and the communities in which it operates. The Board members are
actively involved in engaging with these groups, and this
engagement is instrumental in informing the Board's decision-making
processes.
One of the key objectives of OCT for the year 2022/23 was to
strengthen and increase engagement with shareholders and the wider
stakeholder base. This reflects the Company's commitment to
transparency and responsiveness to the needs and expectations of
its stakeholders.
In addition to engagement, the Board is also diligent in
fulfilling its statutory duties as outlined in section 172 of the
Companies Act. This section requires directors to act in a way that
they consider, in good faith, would be most likely to promote the
success of the Company for the benefit of its members as a whole.
In doing so, directors must have regard to various factors
including the interests of the Company's employees, the need to
foster business relationships with suppliers and customers, and the
impact of the Company's operations on the community and the
environment.
Detailed explanations of how OCT engages with its shareholders
and wider stakeholder base, and how this engagement informs the
Board's decision-making processes, can be found in the Section 172
Statement which provides insights into how the Board members have
discharged their 'section 172' statutory directors' duties.
(e) The board should ensure that workforce policies and
practices are consistent with the company's values and support its
long-term sustainable success. The workforce should be able to
raise any matters of concern.
OCT places a high emphasis on creating a positive and supportive
work environment for its workforce. The Company recognises that its
employees are one of its most valuable assets and is committed to
implementing policies and practices that align with its values and
contribute to its long-term sustainable success.
One of the notable achievements of OCT in this regard is its
recognition in The Sunday Times Best Places to Work 2023. This
recognition is a testament to the Company's commitment to employee
engagement and creating a conducive work environment. The Sunday
Times Best Places to Work awards are known for their rigorous
criteria, and only companies that meet strict engagement standards
are recognised. OCT's inclusion in this list is a significant
achievement and reflects the Company's dedication to its
workforce.
Furthermore, OCT is proactive in offering flexible work
arrangements, such as remote working, which contributes to a better
work-life balance for its employees. This flexibility is
particularly important in the modern work environment and
demonstrates the Company's adaptability and responsiveness to the
needs of its employees.
In addition to flexible work arrangements, OCT is committed to
the continuous development of its workforce. The Company offers
regular training opportunities, ensuring that employees have the
skills and knowledge necessary to excel in their roles. This not
only contributes to the personal and professional development of
the employees but also ensures that the Company has a skilled and
competent workforce that can contribute to its objectives.
Moreover, OCT takes pride in being a supportive employer that
recognises success at every level. This culture of recognition and
support fosters a sense of belonging and motivation among the
employees, which in turn contributes to higher productivity and
engagement.
In summary, through flexible work arrangements, continuous
training opportunities, a culture of recognition, and a supportive
work environment, OCT ensures that its workforce policies and
practices are consistent with the Company's values and support its
long-term sustainable success.
Section 2: Division of responsibilities
(f) The chair leads the board and is responsible for its overall
effectiveness in directing the company. They should demonstrate
objective judgement throughout their tenure and promote a culture
of openness and debate. In addition, the chair facilitates
constructive board relations and the effective contribution of all
non-executive directors, and ensures that directors receive
accurate, timely and clear information.
The Board confirms that Julie Pomeroy was independent on
appointment when assessed against the circumstances set out in
Provision 10 of the Code. The roles of Chief Executive and Chair
are not held by the same individual and the Chair has never held
the position of Chief Executive of the Company. These factors help
ensure that the Chair demonstrates objective judgement throughout
her tenure. The Chair is mindful of her role in facilitating
constructive Board relations and promoting a culture of openness
and debate amongst the Board. This in turn encourages the effective
contribution of all the Non-Executive Directors. The 2023 Board
evaluation concluded that the Board was effective, supportive and
doing well. The Chair is supported in this by the Company
Secretary, who ensures the effective flow of information in a
timely manner between the Board and senior management.
(g) The board should include an appropriate combination of
executive and non-executive (and, in particular, independent
non-executive) directors, such that no one individual or small
group of individuals dominates the board's decision-making. There
should be a clear division of responsibilities between the
leadership of the board and the executive leadership of the
company's business.
OCT recognises the importance of having an effective board that
is led by a Chair who is committed to ensuring the overall
effectiveness of the Board in directing the Company. The Chair of
OCT plays a pivotal role in leading the Board and is responsible
for ensuring that the Board functions effectively in setting and
implementing the Company's direction and strategy.
The Chair demonstrates objective judgment throughout their
tenure, ensuring that decisions made by the Board are in the best
interest of the Company and its stakeholders. By promoting a
culture of openness and debate, the Chair ensures that all board
members, including Non-Executive Directors , are encouraged to
voice their opinions and contribute to discussions. This culture is
essential for ensuring that a range of perspectives is considered
in the Board's decision-making process.
In addition to fostering an open culture, the Chair facilitates
constructive relations among board members. This involves ensuring
that the Board operates cohesively and that the contributions of
Non-Executive Directors are effectively integrated into the Board's
discussions and decisions.
Another critical responsibility of the Chair is to ensure that
the Board members receive accurate, timely, and clear information.
This is essential for enabling the Board members to make informed
decisions. The Chair, therefore, works closely with the Company
Secretary and other relevant personnel to ensure that the Board is
well-informed and has access to all the necessary information.
(h) Non-executive directors should have sufficient time to meet
their board responsibilities. They should provide constructive
challenge, strategic guidance, offer specialist advice and hold
management to account.
Non-Executive Directors are actively engaged and commit
sufficient time to fulfil their board responsibilities. They are
involved in meetings and calls with executive management and key
stakeholders throughout the year.
Non-Executive Directors at OCT provide constructive challenge
and strategic guidance, contributing their expertise and offering
specialist advice. They play a critical role in holding the
management accountable and bringing objective judgment to board
decisions.
The Board ensures that Non-Executive Directors have the capacity
to allocate enough time to their roles. When appointing new
Directors or authorising existing Directors to take on additional
appointments, the Board assesses the time commitment required and
ensures that it does not conflict with their responsibilities at
OCT.
When reviewing the Nominations Committee's recommendation to
appoint a new Director, the Board will always assess whether the
candidate is able to allocate enough time to the role. Similarly,
when assessing the acceptability of an existing Director's wish to
take on external appointments, the Board will assess the additional
demand on that Director's time before authorising the appointment.
This occurs within the Board's agreed existing protocol whereby any
significant appointments taken on whilst serving as a Director of
the Company must be approved by the Board before they are entered
into. This is set out in the Schedule of Matters Reserved for the
Board which may be found on the Company's website . During the
reporting period, Neil Mahapatra's appointment as Non-Executive
Director of the London Stock Exchange traded company, Odyssean
Investment Trust plc, was authorised by the Board. Prior to the
appointment, the Board considered whether Neil could allocate
enough time to his role as a Non-Executive Director of OCT. The
Board was satisfied that Neil had the requisite time to fulfil the
new role as well as his current role with OCT .
The number of Board and Committee meetings held, as well as
attendance, is documented and reviewed to ensure active
participation by Non-Executive Directors. This information can be
found below.
(i) The board, supported by the company secretary, should ensure
that it has the policies, processes, information, time and
resources it needs in order to function effectively and
efficiently.
All of the Directors of the Company have access to the advice of
the Company Secretary, who is responsible for advising the Board on
all governance matters. The Board has implemented a Group policy
framework which is considered by the Board on an annual basis.
Individual policies and associated practices are considered
alongside the framework review process. As stated in the Schedule
of Matters Reserved for the Board (which may be found on the
Company's website) the appointment and removal of the Company
Secretary is a decision for the Board as a whole.
Section 3: Composition, succession and evaluation
(j) Appointments to the board should be subject to a formal,
rigorous and transparent procedure, and an effective succession
plan should be maintained for board and senior management. Both
appointments and succession plans should be based on merit and
objective criteria and, within this context, should promote
diversity of gender, social and ethnic backgrounds, cognitive and
personal strengths.
The Board reviewed its composition and has a formal and
transparent procedure for Board appointments. The Nominations
Committee met three times during the year and there is a formal and
transparent procedure for Board appointments. The Committee
recognises the importance of diversity when considering potential
appointments.
(k) The board and its committees should have a combination of
skills, experience and knowledge. Consideration should be given to
the length of service of the board as a whole and membership
regularly refreshed.
The composition of the Board was considered ahead of the
Company's IPO . During the year, an internal review of both the
skills matrix and current Board composition of knowledge and
experience was completed. Directors are encouraged to keep their
skills up to date.
(l) Annual evaluation of the board should consider its
composition, diversity and how effectively members work together to
achieve objectives. Individual evaluation should demonstrate
whether each director continues to contribute effectively.
The Group is transitioning to the specific requirement of the UK
Corporate Governance Code with regard to having an annual
evaluation of the Board's composition and diversity. An initial
internal review was completed with no external input. Actions
identified from the review included opportunities to broaden the
range of regular training topics for Board members.
Section 4: Audit, risk and internal control
(m) The board should establish formal and transparent policies
and procedures to ensure the independence and effectiveness of
internal and external audit functions and satisfy itself on the
integrity of financial and narrative statements.
The Board has established formal and transparent policies and
procedures, which ensure the external auditor and internal audit
function are independent and effective and are accountable to the
Audit Committee. The Board also monitored the integrity of the
annual and interim financial statements of the Company through the
Audit Committee. Further information about the work of the Audit
Committee, including the subjects above, may be found in the Audit
Committee report.
(n) The board should present a fair, balanced and understandable
assessment of the company's position and prospects.
A statement regarding the Directors' responsibility for
preparing the Annual Report and Accounts and the Directors'
assessment of the Annual Report and Accounts, taken as a whole, as
being fair, balanced and understandable and providing the necessary
information for shareholders to assess the Company's position,
performance, business model and strategy, may be found in the
Strategic Report.
(o) The board should establish procedures to manage risk,
oversee the internal control framework, and determine the nature
and extent of the principal risks the company is willing to take in
order to achieve its long-term strategic objectives.
The Board is responsible for the Group's systems of internal
control and risk management, and for reviewing their effectiveness.
The Board is assisted with these responsibilities by the Audit
Committee. Such a system is designed to manage rather than
eliminate the risks of failure to achieve business objectives, as
well as to help the business take appropriate opportunities. The
Board has conducted reviews of the effectiveness of the system of
internal controls through the processes described within the 'Risk
management' and 'Principal risks and uncertainties' sections and
are satisfied that it accords with the Code and with the Guidance
on Risk Management, Internal Control and Related Financial and
Business Reporting. As described in the Audit Committee report, a
key controls project is ongoing across the Group to focus and
further strengthen our overall control framework. This work to
further enhance internal controls will lead to better assurance and
efficiencies through opportunities to formalise and automate
controls and improve visibility to the Executive Committee and
Board in a consistent way across the Group. The assessment of the
principal and emerging risks, the uncertainties facing the Group,
and the ongoing process for identifying, evaluating and managing
the significant risks faced by the Group is set out in the 'Risk
management' and 'Principal risks and uncertainties' sections . The
Board confirms that it has conducted a robust assessment of the
principal and emerging risks.
Section 5: Remuneration
(p) Remuneration policies and practices should be designed to
support strategy and promote long-term sustainable success.
Executive remuneration should be aligned to company purpose and
values, and be clearly linked to the successful delivery of the
company's long-term strategy.
The way the Remuneration Committee has ensured our remuneration
policies and practices are aligned with our culture, our strategy
and risk management is discussed in the Remuneration Committee
report.
(q) A formal and transparent procedure for developing policy on
executive remuneration and determining director and senior
management remuneration should be established. No director should
be involved in deciding their own remuneration outcome.
The way the Remuneration Committee has ensured our remuneration
policies and practices are aligned with our culture, our strategy
and risk management is discussed in the Remuneration Committee
report.
The Remuneration Committee has delegated responsibility for
setting the Executive Directors' remuneration under the
shareholder-approved Directors' remuneration policy. The
Remuneration Committee also has delegated responsibility for
setting the Chair of the Board's remuneration and the remuneration
of senior management (i.e. the members of the Executive Committee
and the Company Secretary). No Director is able to determine their
own remuneration outcome. The Remuneration Committee reviews
workforce remuneration and related policies when setting Executive
Director remuneration. Ensuring these factors are always considered
means our remuneration policies are clear and as predictable as
possible. Further information may be found in the Remuneration
Committee report.
(r) Directors should exercise independent judgement and
discretion when authorising remuneration outcomes, taking account
of company and individual performance, and wider circumstances.
The Remuneration Committee membership is made up of only
independent Non-Executive Directors. Details of whether the
Remuneration Committee exercised its discretion during the year may
be found in the Remuneration Committee report.
UK Corporate Governance Code Provisions
The UK Corporate Governance Code, as published by the Financial
Reporting Council, provides a comprehensive set of standards for
corporate governance, accounting, and actuarial work in the UK. It
underscores the significance of good corporate governance for the
long-term sustainable success of a company. The Code includes
principles and provisions that address board leadership, company
purpose, division of responsibilities, composition, succession and
evaluation, audit, risk and internal control, and remuneration.
Applicable to all companies with a premium listing, the Company has
voluntarily adopted the code and the Code encourages high-quality
reporting on the application of its principles and provisions. It
also offers guidance on board effectiveness and promotes engagement
with shareholders and other key stakeholders.
As for the compliance with the provisions of the Code, it is
important to note that the Code operates on a 'comply or explain'
basis. This means that while we strive to adhere to all provisions,
there may be instances where we choose not to comply, but we will
always provide a clear explanation for such decisions. The Code
acknowledges that an alternative to complying with a provision may
be justified in particular circumstances based on a range of
factors, including the size, complexity, history, and ownership
structure of a company.
As a pre-revenue small cap business engaged in drug discovery
and clinical trials, complying in full with some provisions of the
Code is not appropriate and we have explained why in each instance
below .
Provision 5: For engagement with the workforce, one or a
combination of the following methods should be used: a director
appointed from the workforce; a formal workforce advisory panel; a
designated non-executive director. If the board has not chosen one
or more of these methods, it should explain what alternative
arrangements are in place and why it considers that they are
effective.
The Company acknowledges that it has not adopted any of the
methods outlined in Provision 5 of the Governance Code for
workforce engagement. Given the small size of our workforce, the
Board has determined that the prescribed methods are not
appropriate. Instead, the Company has implemented an alternative
arrangement wherein the CEO conducts weekly all-hands meetings to
maintain robust engagement with the entire workforce. This approach
ensures that the Board effectively considers the interests of the
workforce in its discussions and decision-making. The Board
believes that this alternative arrangement is effective in the
current context of the Company. Further details on workforce
engagement can be found in the Nominations Committee report.
Provision 11: At least half the board, excluding the chair,
should be non-executive directors whom the board considers to be
independent.
The Company acknowledges that it is currently not in compliance
with Provision 11 of the UK Corporate Governance Code. This
provision stipulates that at least half of the Board members,
excluding the Chair, should be non-executive directors considered
independent by the Board. Our board's current composition includes
a higher proportion of Non-Executive Directors who are not deemed
independent according to the circumstances outlined in Provision
10.
This deviation primarily stems from our strategic decision to
grant share options to our Non-Executive Directors (excluding
Bishrut and Richard) at the time of our IPO in May 2021. This
decision was based on our belief in the transformative power of
personal investment in the Company, as it incentivises, motivates,
and aligns the Directors with the long-term prosperity of the
Company. It also demonstrates their confidence and commitment to
the Company's mission, which is a trust factor when attracting
investors and funding. However, we understand that this approach
may be seen as compromising the independence of our Non-Executive
Directors according to the provisions of the UK Corporate
Governance Code.
The deviation is also due to our transitional phase, wherein key
Non-Executive Directors representing significant shareholders are
playing a vital role in driving strategic initiatives. We are
committed to achieving compliance with Provision 11 in the medium
term and have identified that our succession planning must include
actively seeking qualified independent Non-Executive Directors to
join the Board. The Nomination Committee is overseeing this process
and will ensure that the Board composition aligns with the
provision in due course.
We believe that our approach to Non-Executive Director
remuneration, including share options granted on IPO, is a balanced
one that aligns the interests of our Non-Executive Directors with
those of our shareholders and the long-term success of the Company.
We will continue to monitor and review our practices in light of
evolving best practice and regulatory requirements.
Further details regarding the Board composition and the steps
being taken to address this non-compliance can be found in the
Nominations Committee report.
Provision 12: The board should appoint one of the independent
non-executive directors to be the senior independent director to
provide a sounding board for the chair and serve as an intermediary
for the other directors and shareholders.
The Company acknowledges that during the reporting period, it
was not in compliance with Provision 12 of the Governance Code,
which requires the appointment of a Senior Independent Director.
However, Cheryl Dhillon informally assumed the role. The Board has
recently taken steps to formally recognise Cheryl Dhillon as the
Senior Independent Director, effective from the May 2023 board
meeting. This appointment is aimed at enhancing the governance
structure and ensuring compliance with Provision 12.
Provision 24: The board should establish an Audit & RISK
Committee of independent non-executive directors, with a minimum
membership of three, or in the case of smaller companies, two. The
chair of the board should not be a member. The board should satisfy
itself that at least one member has recent and relevant financial
experience. The committee as a whole shall have competence relevant
to the sector in which the company operates.
The Company acknowledges that it is not in full compliance with
Provision 24 of the UK Corporate Governance Code, which stipulates
the formation of an Audit Committee consisting of independent
non-executive directors, with the Chair of the Board not being a
member. Currently, Julie Pomeroy, the Chair of the Board, also
holds the position of the Chair of the Audit Committee. This
decision was made in light of the Chair's substantial financial
expertise and the necessity for consistent leadership.
In addition to this, it is important to note that Karen Lowe, an
Executive Director /CFO, was a member of the Audit Committee from
the start of the relevant period until her resignation on 31
October 2022. This was a carryover from the previous period when
the Company adopted the QCA code before voluntarily transitioning
to the Corporate Governance Code.
Following Karen's departure, the Company decided that her
successor, Paul Smalley, should not be a member of the Audit
Committee, further aligning the Company's governance with the
provisions of the UK Corporate Governance Code.
While Richard Hathaway's ties to Imperial Brands might impact
perceptions of his independence, his extensive background in
auditing and risk management is invaluable. His experience as an
auditor for UK listed companies and leadership in risk management
at Imperial Brands greatly enhances the Audit Committee. The Board
believes Richard's expertise significantly enriches the committee's
efficacy.
To address potential conflicts of interest and independence
issues, the Board has ensured the inclusion of independent
Non-Executive Directors on the Audit Committee and has established
regular reviews of the Chair's dual role by the Board. The Board is
of the belief that this structure, while not strictly adhering to
Provision 24, serves the best interest of the Company at this
juncture. The situation will be continually reviewed, and
adjustments will be made as deemed necessary..
Provision 26: The annual report should describe the work of the
Audit Committee, including:
-- the significant issues that the Audit & RISK Committee
considered relating to the financial statements, and how these
issues were addressed;
-- an explanation of how it has assessed the independence and
effectiveness of the external audit process and the approach taken
to the appointment or reappointment of the external auditor,
information on the length of tenure of the current audit firm, when
a tender was last conducted and advance notice of any retendering
plans;
-- in the case of a board not accepting the Audit & RISK
Committee's recommendation on the external auditor appointment,
reappointment or removal, a statement from the Audit & RISK
Committee explaining its recommendation and the reasons why the
board has taken a different position (this should also be supplied
in any papers recommending appointment or reappointment);
-- where there is no internal audit function, an explanation for
the absence, how internal assurance is achieved, and how this
affects the work of external audit; and
-- an explanation of how auditor independence and objectivity
are safeguarded, if the external auditor provides non-audit
services.
The Company acknowledges non-compliance with Provision 26 due to
the absence of an internal audit function. The Board, after annual
reviews, considers an internal audit function to be
disproportionate given the size, complexity and risk profile of OCT
during the year. Instead, internal assurance is maintained through
robust governance, risk management, and internal controls. The
Audit Committee plays a key role in overseeing risks, evaluating
controls, and ensuring the external audit's independence and
effectiveness. The Committee also liaises with the Remuneration
Committee to incorporate risk considerations in remuneration
policies.
Nominations Committee report
NominationS Committee meeting attendance
Cheryl Dhillon (Chair) (3/3)
Julie Pomeroy (3/3)
Bishrut Mukherjee (3/3)
Introduction from the Committee Chair
I am pleased to present this report covering the work of the
Nominations Committee in 2023. The Nominations Committee continues
to be one of the core governance safeguards for OCT. This report
details how the Committee seeks to avoid governance issues by
engaging in transparent processes and adopting best practice
guidance.
The purpose of this report is to provide a comprehensive
overview of the Nominations Committee's work in 2023 for OCT. The
Nominations Committee plays a critical role in ensuring good
governance practices within the Company. This report will outline
the Committee's commitment to transparency and adherence to best
practices.
Board Evaluation
One of the key activities carried out by the Nominations
Committee in 2023 was a thorough evaluation of the Board. This
evaluation was conducted internally, with the assistance of the
Company Secretary. The evaluation process involved the use of a
detailed self-assessment questionnaire and separate surveys. These
tools were specifically designed to identify any skills gaps within
the Board, assess the overall effectiveness of the Board, and
gather feedback from each Director on their own individual
performance and that of their fellow Directors .
The Board evaluation yielded valuable insights for each Director
. These insights provide Directors with actionable information that
they can use to enhance their contributions to the Board.
Additionally, the evaluation process aims to improve the overall
effectiveness of the Board as a whole.
Succession
In September 2022 the Committee oversaw the process of
appointing the new Group Finance Director ensuring that the process
was rigorous and thorough. Paul Smalley joined the Company in
October 2022. Paul's strong background in strategic management
spans various market sectors, including IT, HR, and procurement.
His diverse experience, ranging from small and medium-sized
enterprises to publicly quoted companies, will be a valuable asset
to our Company. The Committee also appointed Clarissa
Sowemimo-Coker, a highly qualified internal candidate, as the new
CEO. Clarissa, who joined the Company in 2018 and who previously
held the positions of Chief Operating Officer and General Counsel,
assumed the role of CEO on an interim basis in December before the
Committee made the appointment permanent in April 2023. Both
appointments were accompanied by a handover period with the
outgoing CEO and Finance Director, ensuring a smooth transition of
leadership within the Board.
The Committee also played a significant role in the appointment
of two new members of the executive team. Our new General Counsel
and Company Secretary, Rob Bennett, joined OCT in December 2022 and
assumed the role of Company Secretary on 12 January 2023. Rob
brings a wealth of experience and expertise to the Company, having
previously served as General Counsel and Company Secretary at
Bestway Retail. His professional journey spans over 15 years,
during which he has gained extensive experience in the UK and
international markets across various sectors. His expertise in
legal, risk, and compliance matters has been honed through his work
with SMEs and quoted companies. Rob's exceptional work has been
recognised in the Legal 500's GC Powerlists in 2021 and 2022, and
he was a finalist for the Team of the Year at The Lawyer Awards in
2021.
Dr Tim Corn has been appointed to the newly created position of
CMO. Dr Corn is an independent pharmaceutical consultant who brings
a wealth of experience from his senior roles in both large and
small pharmaceutical organisations. He currently holds the position
of CMO at Nodenza Inc and serves as a Medical Adviser to Confo
Therapeutics SA. In addition, he is a non-executive director on the
Board of Physiomics plc. In his new role as CMO, Dr Corn will be
tasked with overseeing the Company's clinical research and
development activities and providing expert medical guidance and
advice to the team. These appointments, which were made following a
rigorous process, have significantly strengthened the leadership of
OCT.
Composition and Diversity
The Nominations Committee remains mindful of the importance of
diversity within leadership and senior management teams. Based on
the key findings and recommendations from the FTSE Women Leaders
Review and the Parker Review, it's clear that diversity,
particularly gender and ethnic diversity, is a crucial aspect of
effective board composition. The FTSE Women Leaders Review
highlights significant progress in gender diversity, with the FTSE
100 surpassing the 40% target for women on boards three years ahead
of schedule, reaching 40.5% representation. However, challenges
remain, particularly in CEO roles and the achievement of the 33%
target for women in leadership positions. The composition of the
OCT board reflects a commitment to diversity and inclusion. As at
30 April 2023, out of the seven board members, three are women,
including the Non-Executive Chair, Senior Independent Director and
the CEO, constituting approximately 43% of the Board. This
representation surpasses the Hampton- Alexander Review's 33% target
and aligns with the 40% achieved by FTSE 100 companies. Furthermore
, as at 30 April 2023 , three members of the Board are of colour,
including the Senior Independent Director, representing
approximately 43% ethnic diversity, in line with the Parker
Review's recommendations. Diverse boards, encompassing both gender
and ethnic diversity, are known to encourage varied perspectives,
foster innovation, and enhance decision-making. OCT's board
exhibits this positive indicator. To maintain and enhance
diversity, this committee is ensuring diversity is integral to
succession planning and recruitment strategies. Moreover, fostering
an inclusive culture that values and respects diversity in all
forms is essential. We believe that by fully embracing diversity,
OCT can tap into a broader range of experiences, knowledge, and
networks, leading to comprehensive discussions, well-informed
decisions, and a more inclusive corporate culture.
Employee Engagement
Our Company has placed a significant emphasis on employee
engagement, which has been recognised by our inclusion in The
Sunday Times' prestigious list of the Best Places to Work in 2023.
This acknowledgement demonstrates our commitment to fostering a
supportive and captivating work environment.
In response to the COVID-19 lockdowns, we made a strategic
decision to terminate our lease on traditional office space and
transition to a fully remote working model supported by advanced
technology. This shift not only helps us reduce our carbon
footprint by eliminating the need for daily commuting but also
provides time and cost savings. Additionally, it allows us to hire
a diverse workforce from beyond our immediate commuting radius.
To complement our remote-first approach, we utilise shared
coworking spaces and organise regular gatherings to foster strong
company culture and enhance team unity.
Looking Ahead
In order to enhance the effectiveness and long-term
sustainability of OCT, the Committee plans to allocate more time in
2024 to evaluate the composition of the Board. While the current
Board possesses a diverse range of skills and experience, it is
recognised that a more comprehensive succession plan needs to be
developed. With the exception of Richard Hathaway, all
Non-Executive Directors (NEDs) were appointed in 2021 and have
equal terms. However, the Committee acknowledges the importance of
implementing a succession plan that encompasses short-term,
medium-term, and long-term contingencies, based on the outcomes of
a thorough board-effectiveness assessment. Throughout this process,
it is crucial to retain the necessary expertise required to support
the Company's continuous growth, strategic initiatives, and
commitments to all our stakeholders.
Cheryl Dhillon
Chair, Nominations Committee
Group ethnicity diversity statistics
Number Percentage Number Number Percentage
of board of the of senior in executive of executive
members board positions management management
(2) on the (including (including
board direct direct
(3) reports) reports)
Gender (4)
---------- ----------- ----------- -------------- --------------
Men 4 57.1% 1 3 (4) 75% (67%)
---------- ----------- ----------- -------------- --------------
Women 3 42.9% 3 1 (2) 25% (33%)
---------- ----------- ----------- -------------- --------------
Not specified/prefer - - - - -
not to say
---------- ----------- ----------- -------------- --------------
Ethnicity (4)
---------- ----------- ----------- -------------- --------------
White British or other
White (including minority-white
groups) 4 57.1% 3 4 (5) 100% (83%)
---------- ----------- ----------- -------------- --------------
Mixed/Multiple Ethnic
Groups 3 42.9% 1 0 0%
---------- ----------- ----------- -------------- --------------
Asian/Asian British - - - - -
---------- ----------- ----------- -------------- --------------
Black/African/Caribbean/Black
British (1) (17%)
---------- ----------- ----------- -------------- --------------
Other ethnic group,
including Arab
---------- ----------- ----------- -------------- --------------
Not specified/prefer
not to say
---------- ----------- ----------- -------------- --------------
(1) Data gathered from Employee and Board Survey (July 2023)
(2) The Board includes the Chair, Executive Directors and
Non-Executive Directors.
(3) Senior positions on the Board include the CEO, CFO, Chair
and Senior Independent Director.
(4) The information disclosed, and the format of the table, is
prescribed by Listing Rule 14.3.33R.
EQUALITY & Diversity Policy
OCT is dedicated to promoting equal opportunities for all
employees and job applicants. We aim to create an environment that
is free from discrimination and harassment, where cultural
diversity and individual differences are positively valued, and
decisions are based on merit. We do not discriminate against
employees on the basis of age, disability, gender reassignment,
gender identity, marital or civil partner status, pregnancy or
maternity, race, colour, nationality, ethnic or national origin,
religion or belief, sex or sexual orientation.
We encourage and celebrate diversity and have established an
open and collaborative culture that allows great people to do what
they do best. We seek to avoid any form of unlawful discrimination
in all aspects of employment including recruitment, promotion,
opportunities for training, pay and benefits, discipline and
selection for redundancy.
We are committed to ensuring equal pay for employees undertaking
equal work, operating a rewards system that is transparent, based
on objective criteria and free from gender bias. We annually review
existing pay and reward mechanisms for all our employees and
analyse and identify reasons for any significant gender
variations.
We monitor the ethnic and gender composition of the existing
workforce and of applicants for jobs, and the number of people with
disabilities within these groups. We take appropriate action to
address any problems which may be identified as a result of the
monitoring process.
We may use appropriate lawful methods, including positive
action, to address the underrepresentation of any group which we
identify as being underrepresented in particular types of job. We
may choose to favour a candidate from an under-represented minority
in cases where two candidates for a job or for promotion are
equally well qualified.
As of now, our board does not have a specific target for female
membership or members from an ethnic minority. However, we are
mindful of the recommendations of both the Parker Review and FTSE
Women Leaders Review and are committed to increasing diversity at
all levels within the organisation. We will continue to review this
policy on an annual basis to ensure it remains appropriate.
Succession
A crucial aspect of the Nominations Committee's responsibilities
is the establishment and preservation of a consistent leadership
structure, as well as the proactive management of changes and their
effects on the Company's future leadership requirements. This
applies to both Executive and Non-Executive roles. Having the right
leaders in place allows the Company to compete effectively in the
market and fulfil its obligations to its stakeholders.
As outlined in the rest of this report, the Nominations
Committee has successfully managed succession plans for both the
Board and senior management, ensuring that the necessary skills,
expertise, and experience are present in the Company's leadership
.
Board Succession
The Nominations Committee assesses the skills and expertise
present on the Board, comparing them to the skills and expertise it
deems necessary given the Company's strategy, business priorities,
and culture. Since the Company's inception, our core strategy has
remained largely consistent. However, changes in the market, the
size of our organisation, and its maturity stage shall necessitate
an evolution of our Board through thoughtful and well-managed
succession planning that does not compromise the Board's
stability.
The process typically used for Non-Executive Director
appointments is outlined below. We shall introduce a phased
succession programme for Non-Executive Directors and are satisfied
with the balance of tenure length, as well as diversity,
background, and perspective of our current Non-Executive
Directors.
Appointment
When Board succession planning identifies the need for a
Non-Executive appointment to the Board, the Nominations Committee
will engage an external search consultancy to carry out the
recruitment process for a new Non-Executive Director.
The external search consultancy will be informed of our Equality
and Diversity Policy (if they are not already aware) and the
Nominations Committee will specifically instruct them to produce a
diverse shortlist of candidates for the position. The skills
matrix, along with the collective knowledge, experience, and
diversity of the Board and the Directors' length of service, will
be used by the Committee to identify opportunities for a new
Non-Executive Director to enhance the Board's skillset. This will
guide the search undertaken by the external search consultancy.
Following the longlisting and shortlisting processes, and before
the Nominations Committee makes any recommendation to the Board,
the preferred candidate will meet with existing members of the
Board.
Induction
It was highlighted in this year's Board Evaluation that there is
an opportunity for improvement in this regard. In collaboration
with the Company Secretary, new Directors shall undergo an
induction programme tailored to their individual needs. This
typically includes meetings with members of the Executive
Committee, key employees, and advisers . New Directors will also
receive a variety of documentation, including Company publications,
Board materials, and formal information on the role and
responsibilities of UK-listed company directors.
Remuneration Committee report
Remuneraton Committee meeting attendance
Cheryl Dhillon (Chair) (3/3)
Julie Pomeroy (3/3)
Bishrut Mukherjee (3/3)
Remuneration Committee Chair's statement
As the Chair of the Remuneration Committee, I am delighted to
present the Annual Remuneration Report for OCT for the financial
year ended 30 April 2023
Remuneration Policy and Executive Compensation
This year, we have continued to uphold our commitment to
aligning executive remuneration with the long-term interests of our
shareholders and the strategic objectives of our company. We firmly
believe that a well-structured remuneration policy is pivotal to
attracting, retaining, and motivating the high-calibre talent that
underpins our success.
Balancing Attraction and Financial Prudence
Being a pre-revenue business, we are keenly aware of the need to
balance the attraction of the best possible external candidates
with the demands of cashflow challenges. This delicate balance has
been a key consideration in our remuneration decisions this year,
and we have strived to ensure that our compensation packages are
both competitive and sustainable.
Looking Ahead
In the coming year, a key focus will be reviewing our
remuneration policies to ensure they continue to support our
strategic objectives and align with the long-term sustainable
success of our business. We will also aim to extend the principles
of these policies to all levels of the business, ensuring that our
commitment to strategic success permeates every layer of our
organisation.
We intend to review how we can strengthen the alignment between
executive remuneration and our strategic objectives by introducing
performance metrics within and enhancing the Long-Term Incentive
Plan (LTIP).
Commitment to Fairness and Transparency
Our remuneration policy continues to be guided by principles of
fairness, transparency, and market competitiveness even during a
challenging global cost of living crisis . We have maintained a
balanced approach to remuneration, ensuring that rewards reflect
individual performance, the performance of the business, and the
interests of our shareholders.
Conclusion
We thank our shareholders for their ongoing support and
constructive engagement on remuneration matters. We look forward to
continuing our dialogue in the year ahead.
Cheryl Dhillon
Chair, Remuneration Committee
Summary of the Directors' remuneration policy
Our remuneration policy is designed to support the strategic
objectives of OCT and align the interests of our Executive
Directors and senior management with those of our shareholders. The
policy is based on the following key principles:
-- Competitiveness : Our remuneration packages are designed to
attract, retain, and motivate high-calibre individuals who will
contribute to the long-term success of the Company.
-- Alignment with shareholders : A significant proportion of
executive remuneration is performance-related and linked to the
achievement of strategic objectives that drive shareholder
value.
-- Performance linkage : We believe in rewarding success.
Therefore, a substantial part of our remuneration packages is
linked to individual and Company performance.
-- Prudence : Given our status as a pre-revenue business, we are
mindful of our cashflow challenges. Therefore, our remuneration
policy is designed to balance the need for competitiveness with
financial prudence.
(s) Executive Directors' Remuneration Policy
The remuneration package of the Executive Directors (including
the previous Executive Chairman) includes the following
elements:
Basic salary
Salaries are normally reviewed annually, and take into account
inflation, market conditions and salaries paid to directors of
comparable companies. Pay reviews also take into account Group and
personal performance. The Board as a whole decides the remuneration
of the Executive Directors, informed by the recommendation of the
Remuneration Committee. There were no increases in the current year
due to the share price performance.
Performance related pay scheme
There are two performance related pay schemes for Executive
Directors. The first is an annual bonus scheme which is based upon
the achievement of certain targets by the Group, as appropriate.
The Executive Directors' bonus recognised in the 2023 financial
year is GBPnil (2022: GBPnil) [3] . Bonus is capped at 20% of base
salary.
The second scheme is a share option scheme, with 34,121,581
options granted to Directors (and 35,462,775 to senior employees,
four of whom have subsequently left the Group) as part of the
replacement of options previously granted in OCTL, and a further
62,427,016 options at a strike price of GBP0.065 granted in May
2021 to Directors (and 24,010,392 to senior employees) under a new
scheme. No share options were issued in the current year. Full
details on the schemes can be found in note 24. Variable
remuneration cannot exceed 50% of an Executive Director's base
salary.
(t) Non-Executive Directors' Remuneration Policy
The fees for the Non-Executive Directors are determined by the
Board, with the Non-Executive Directors excluded from any
discussions or decisions about their own remuneration. The
Non-Executive Directors do not receive bonuses or pension
contributions and are not entitled to participate in any of the
Group's share schemes other than the options granted on IPO in May
2021.
A total of 7,203,117 share options were granted at a strike
price of GBP0.065 to three Non-Executive Directors in May 2021,
with no further options issued since then. Reasonable expenses
incurred in carrying out their duties as Directors of the Group are
reimbursed.
Directors' remuneration report
Executive Director Remuneration
The Board's policy is that service contracts of Executive
Directors are not fixed term and should provide for termination by
the Group on nine months' notice. The service contracts of each of
the current Executive Directors provide for such a period of notice
(having been increased from six months in January 2022). The
independent Non-Executive Directors have letters of appointment
providing fixed three-year service periods, which may be terminated
by giving six months' notice. Directors in post during the year
were as follows:
Date Date Appointed Date Resigned Date Resigned
Appointed to OCTL from OCT from OCTL
to OCT
Executive Directors
Dr John Lucas CEO Director 23-Apr-21 21-May-21 02-Dec-22 02-Dec-22
Clarissa Sowemimo-Coker COO and Director 04-Feb-21 25-Jun-19
General Counsel
(until Dec22
then CEO)
- -
Karen Lowe Finance Director 23-Apr-21 21-May-21 17-Oct-22 17-Oct-22
Director
Paul Smalley Finance Director 17-Oct-22 17-Oct-22 - -
Director
Non-Executive Directors
Neil Mahapatra Director 04-Feb-21 10-Mar-17 - -
Julie Pomeroy Director 23-Apr-21 - - -
Cheryl Dhillon Director 23-Apr-21 - - -
Bishrut Mukherjee Director 23-Apr-21 26-Feb-20 - 21-May-21
Gavin Sathianathan Director 23-Apr-21 21-Jun-18 24-Nov-21 21-May-21
Richard Hathaway Director 01-Feb-22 - - -
Directors' Remuneration (audited)
Details of the remuneration of the Directors for the financial
year are set out below. This excludes share options which are shown
separately.
Salaries Pension Other Total Fixed Bonus Total
& Fees Benefits Variable
GBP GBP GBP GBP GBP GBP
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Executive Directors
Neil Mahapatra
(1) - 116,875 - 13,136 - - - 130,011 - - - -
Dr John
Lucas
(2) 258,263 183,333 26,597 19,544 - - 284,860 202,877 - - - -
Clarissa
Sowemimo-Coker
(3) 194,167 174,167 20,738 18,627 764 796 215,669 193,590 - - - -
Karen
Lowe (4) 159,590 149,375 11,244 12,754 1,388 964 172,222 163,093 - - - -
Paul Smalley
(5) 90,733 - 8,511 - 568 - 99,812 - - - - -
Non-Executive Directors
Julie
Pomeroy
(6) 45,000 27,083 - - - - 45,000 27,083 - - - -
Cheryl
Dhillon
7 25,000 22,917 - - - - 25,000 22,917 - - - -
Bishrut
Mukherjee
(8) 25,000 14,583 - - - - 25,000 14,583 - - - -
Gavin
Sathianathan
(9) - 25,694 - - - - - 25,694 - - - -
Richard - - - - - - - - - - - -
Hathaway10
Neil Mahapatra1(1) 25,000 5,208 - - - - 25,000 5,208 - - - -
------------------- -------- ----- ----- ----- -------
TOTAL 822,753 719,235 67,090 64,061 2,720 1,760 892,563 785,056 - - - -
------------------- -------- -------- ------- ------- ------- ------- -------- -------- ----- ----- ----- -------
1. Neil Mahapatra was paid a base salary of GBP150,000 and
GBP15,000 for Directors' responsibilities, this was paid pro rata 1
June 2021 to 14 February 2022. He received 10% pension benefit and
3% of qualified earnings for Auto-Enrolment pensions. From 14
February 2022 onwards he received an annual fee of GBP25,000 in his
role as Non-Executive Director.
2. Dr John Lucas (CEO) was paid a base salary of GBP185,000 and
GBP15,000 for Directors' responsibilities, He received 10% private
pension and 3% of qualified earnings for Auto-Enrolment pensions.
The maximum that he could have received under the bonus system is
GBP40,000 (2022: GBP40,000). As detailed in the table above he
received no bonus in the year or the prior period.
3. Clarissa Sowemimo-Coker was paid a base salary of GBP175,000
pro rata as COO/General Counsel and GBP185,000 as CEO and GBP15,000
for Directors' responsibilities. She receives 10% private pension
and 3% of qualified earnings for Auto-Enrolment pensions.
4. Karen Lowe was remunerated in line with time spent which
exceeded the contractual basis, this was based on the base salary
of GBP175,000 FTE and GBP15,000 for Directors' responsibilities.
She received 10% private pension and 3% of qualified earnings for
Auto-Enrolment pensions.
5. Paul Smalley was paid a base salary of GBP130,000. He
receives 10% private pension and 3% of qualified earnings for
Auto-Enrolment pensions.
6. Julie Pomeroy received a fee of GBP25,000 as a Non-Executive
Director, this was paid on a pro-rata basis from 1 June 2021 to 14
February 2022. As Chair she receives a fee of GBP45,000, this was
paid on a pro-rata basis from 15 February 2022.
7. Cheryl Dhillon receives a fee of GBP25,000.
8. Until 1 September 2021 Bishrut Mukherjee was a representative
of Imperial Brands Plc (a significate shareholder of the Group via
its subsidiary Imperial Brands Ventures Ltd) and received no
remuneration. Since 1 October 2021 he has been an independent
member of the Board and receives a fee of GBP25,000 per annum.
9. Gavin Sathianathan received an annual fee of GBP25,000
pro-rated up to his resignation on 24 November 2021.
10. Richard Hathaway joined the Board on 1 February 2022 as a
representative of Imperial Brands Plc and receives no
remuneration.
Pension
The Group has one pension scheme (a defined contribution
scheme), which all new employees (excluding Non-Executive
Directors) are eligible to join. The Company contribution rate for
new-hire Executive Directors is set at the same rate as the wider
workforce, 10%.
Benefits
The Group offers private medical cover for Executive Directors
and immediate family, this policy extends to the wider workforce as
promoting health and well-being is in keeping with the ethos of the
Company.
Directors' Share Options
Number of options
Number of options granted granted in the
in the prior year under the prior year under
replacement share option scheme the new scheme
for Directors previously employed for Directors
by OCTL of the Group
------------------------------------- ------------------
At GBP0.0416 At GBP0.05 price At GBP0.065 price
price
---------------- ------------------- ------------------
Neil Mahapatra - - 2,401,039
Dr John Lucas 11,597,393 9,870,797 26,411,430
Clarissa Sowemimo-Coker 5,798,696 6,854,695 26,411,430
Karen Lowe - - 7,203,117
Paul Smalley - - -
Gavin Sathianathan - - 2,401,039
Cheryl Dhillon - - 2,401,039
Julie Pomeroy - - 2,401,039
Bishrut Mukherjee - - -
Richard Hathaway - - -
---------------- ------------------- ------------------
17,396,089 16,725,492 69,630,133
---------------- ------------------- ------------------
There were no new options granted in the current year, and no
options that vested. See note 24 for details of the Group's Share
Option Schemes.
Directors' Shareholdings and Interests (audited)
The interests of each person who has served as a Director of the
Company during the year as at 30 April 2023 (together with
interests held by his or her persons closely associated) are shown
in the table below:
Number of Ordinary Shares
held
Dr John Lucas -
Clarissa Sowemimo-Coker 1,189,594
Karen Lowe 340,010
Paul Smalley -
Julie Pomeroy 200,000
Neil Mahapatra 199,355,382
Bishrut Mukherjee 111,111
Cheryl Dhillon -
Richard Hathaway -
There is no requirement for Directors or Non-Executive Directors
to hold shares in the Company .
Non-Executive Director Remuneration
Our Non-Executive Directors are compensated with a fixed fee for
their services. Unlike other roles, they do not receive bonuses or
pension contributions. However, in alignment with our belief in the
value of personal investment and commitment to the Company's
mission, all Non-Executive Directors , with the exception of
Bishrut Mukherjee and Richard Hathaway, were granted share options
at the time of our Initial Public Offering (IPO) in May 2021
A total of 7,203,117 share options were granted at a strike
price of GBP0.065. This decision was made to incentivise and align
our Non-Executive Directors with the long-term prosperity of the
Company, transforming their relationship with the business from
being purely transactional to becoming active participants in the
continuing success of the Company. This approach does not
compromise their independence and objectivity in
decision-making.
It's important to note that no new share options have been
granted since the IPO. This is in line with our commitment to
maintaining the independence of our Non-Executive Directors and
ensuring that their decisions are not influenced by the prospect of
additional share options.
For the year 2023, the fees for our Non-Executive Directors were
GBP120,000. We believe that this remuneration structure, combining
fixed fees with share options, is a balanced approach that aligns
the interests of our Non-Executive Directors with those of our
shareholders and the long-term success of the Company.
Audit Committee report
Audit Committee meeting attendance
Julie Pomeroy (Chair) (4/4)
Richard Hathaway (4/4)
Karen Lowe (3/3) Resigned 17 October 2022
Cheryl Dhillon (3/4) [4]
Introduction from the Committee Chair
As the Chair of the Audit Committee for Oxford Cannabinoid
Technologies, I am pleased to present our 2023 Audit Report.
Risk Management and Internal Controls Review
At the request of the Board, the Company Secretary conducted a
'root and branch' review of the Company's risk management. As a
pre-revenue business involved in complex and costly drug
development and clinical trials, we believe it is crucial for us to
have a thorough understanding of how uncertainty affects our
business objectives. While we had a good understanding of these
effects before, we now significantly improved our focus and
comprehension which enhances the Board's strategic thinking and
decision-making process.
Looking Ahead
Next year, we are looking to continue our work on risk
management, particularly focusing on identifying, assessing, and
mitigating potential risks that could impact our strategic
objectives.
Conclusion
We are proud of the progress we have made over the past year and
remain committed to maintaining the highest standards of corporate
governance. We believe that our robust governance structure and
risk management processes will continue to serve the best interests
of our shareholders and other stakeholders.
Thank you for your continued support.
Julie Pomeroy
Chair of the Audit Committee
Financial Reporting
One of the Committee's principal responsibilities is to review
and report to the Board on the clarity and accuracy of the Group's
financial statements, including the Annual Report & Accounts
and interim statement.
The Audit Committee reviewed Oxford Cannabinoid Technologies'
2022 Annual Report and Accounts and the half-yearly financial
report published in January 2023. As part of these reviews, the
Committee received papers from management on accounting policy,
areas of significant judgement, the Group's key risks, going
concern considerations, and longer-term viability. The Committee
also discussed reports from Moore Kingston Smith LLP (MKS) on their
audit of the Annual Report and Accounts and review of the
half-yearly financial report.
The Committee considered whether the Annual Report and Accounts
were fair, balanced, and understandable and contained the
information necessary for shareholders to assess the Company's
position, performance, business model, and strategy.
(a) R&D Tax Credit
The committee recognises that R&D tax credits are an
important source of income for the Company whilst in pre-revenue
phase. In order to ensure the validity of tax credits, the Company
engages a 3(rd) party R&D tax specialist to provide a detailed
R&D report to support the tax submission that is made on an
annual basis.
(b) Governance Updates
Updates on the latest governance practices for audit committees
and changes in reporting requirements were provided by the external
auditor. The Committee received regular updates on the proposed
corporate governance reforms as set out in the Government's White
paper 'Restoring trust in audit and corporate governance'.
(c) Committee Effectiveness
An effectiveness review was carried out on the Committee and its
members as part of the wider external Board evaluation process. The
review concluded that the current mix of financial, commercial and
relevant sector experience of the Audit Committee, and that of its
advisers , was such that the Committee could effectively exercise
its responsibilities to the Group in relation to risk and
controls.
(d) Policies and Conflicts
The Committee reviewed its policies in relation to allocation of
non-audit work and employment of ex-audit firm personnel. It also
reviewed the Directors' conflicts of interest register.
(e) Committee Composition and Performance
Throughout the year under review, the Audit Committee was
comprised of two independent Non-Executive Directors and a
non-independent Non-Executive Director , each bringing a wealth of
diverse experience to the table. The Board is confident that the
Committee, including its Chair, Julie Pomeroy, possesses an
appropriate level of recent and relevant financial expertise to
effectively discharge its duties.
We acknowledge that the Company's current structure does not
fully comply with Provision 24 of the UK Corporate Governance Code.
This provision stipulates that an Audit Committee should consist of
independent Non-Executive Directors , with the Chair of the Board
not being a member. However, Julie Pomeroy, the Chair of the Board,
also serves as the Chair of the Audit Committee. This decision was
made in light of Julie's extensive financial expertise and the need
for consistent leadership. Richard Hathaway is regarded as a
non-independent Non-Executive Director but is a member of the Audit
Committee in view of his strong audit and financial background.
The Board conducts regular reviews of Julie's dual role. While
this arrangement does not strictly adhere to Provision 24 of the UK
Corporate Governance Code , the Board believes it is in the best
interest of OCT at this time. This situation will continue to be
reviewed, and adjustments will be made as necessary.
Julie Pomeroy was appointed as the Audit Committee Chair in
2021. She is responsible for setting the Committee's agenda and
maintaining key relationships between the Executive Committee, the
Company Secretary, and senior representatives of the external
auditor. Julie ensures that key audit issues are reported to the
Board in a timely and effective manner and that these issues are
communicated to shareholders in the Annual Report. At the 2023 AGM,
Julie will present a summary of the Audit Committee's work to
shareholders.
(f) Recent and Relevant Financial Experience
Julie, our Audit Committee Chair, brings a wealth of experience
to the role, with over two decades serving as a Board director for
public limited companies. As a Chartered Accountant and a Chartered
Director, she possesses a deep understanding of the corporate
governance standards required for UK-listed companies. Julie served
as the Finance Director and Company Secretary of AIM-listed
Dillistone Group Plc for over a decade, providing her with robust
financial credentials. Furthermore, her tenure as a non-executive
director for various NHS organisations, where she either chaired or
was a member of their audit committees, has enriched her experience
in governance and oversight roles.
Richard, offers a broad range of financial experience, having
previously advised a variety of international businesses, both
public and private, across multiple sectors. His senior finance and
corporate development roles at Imperial Brands have equipped him
with extensive transaction, financing, and capital-raising
experience, which is particularly relevant to OCT as we seek
further investment rounds to support our strategic objectives. As a
former auditor of numerous UK-listed companies and the former head
of risk management at Imperial, Richard also contributes extensive
corporate governance experience. He is a Chartered Accountant with
substantial recent and relevant financial experience.
(g) Competence Relevant to the Sector
Cheryl, another integral member of our team, brings over 30
years of pharmaceutical industry experience, spanning start-ups to
large global enterprises. She has held various positions, from
Senior Vice President of Finance to CEO, and has hands-on
management experience in many of the functions critical to the
successful development and commercialisation of specialty
pharmaceutical products, particularly in EU markets. Since
transitioning to semi-retirement in 2020, Cheryl has focused her
expertise on assisting innovative healthcare-related companies at
the Board level. In addition to being a Fellow of the Association
of Chartered Certified Accountants (ACCA), she holds an MBA from
the University of Hertfordshire, specialising in strategy, and a
coaching qualification from the University of Strathclyde.
(h) External Auditor
The Committee has primary responsibility for managing the
relationship with the external Auditor, MKS, including assessing
their performance, effectiveness, and independence annually and
recommending to the Board their reappointment or removal.
The Company has complied with the provisions of the UK Corporate
Governance Code for the financial year under review in respect to
audit tendering and the provision of non-audit services.
(i) Annual Review of the External Auditor
The Committee conducts an effectiveness review of the external
Auditor on an annual basis which aims to ensure a robust audit is
performed, auditor performance is optimised, and encourages candid
feedback and communication between the Auditor and the
Committee.
After taking all of these matters into account, the Committee
concluded that MKS had performed their audit effectively,
efficiently, and to a high quality. Accordingly, the Committee has
recommended to the Board that MKS be reappointed as Auditor to the
Group for the year ending 30 April 2024.
(j) External Auditor Independence
Auditor independence is an essential part of the audit framework
and the assurance it provides. The Committee therefore undertook a
comprehensive review of auditor independence prior to appointment
and during 2022, which included:
-- A review of the independence of the external auditor and the
arrangements which they have in place to restrict, identify, report
and manage conflicts of interest.
-- A review of the changes in key external audit staff for the
current year and the arrangements for the day-to-day management of
the audit relationship.
-- Consideration of the overall extent of non-audit services
provided by the external auditor, in addition to case-by-case
approval of the provision of non-audit services as appropriate.
-- Deliberation of the likelihood of a withdrawal of the auditor
from the market and note taken of the fact that there are no
contractual obligations to restrict the choice of external
auditor.
At the year end, the external auditor formally confirmed that
they had complied with the requirements of the FRC Ethical Standard
as well as internal requirements and their independence and
objectivity had been maintained.
(k) External Auditor Effectiveness
To assess the effectiveness of the external auditor, the
Committee reviewed:
-- The proposed plan of work presented by the external auditor,
including audit risks, materiality, terms of engagement and fees
prior to commencement of the 2022 audit.
-- The external auditor's fulfilment of the agreed audit plan
and any variations from the plan.
-- Evaluation from key management personnel and members of the
Committee of the external auditor's exercise of professional
scepticism and challenge.
-- Robustness and perceptiveness of the auditor in their
handling of the key accounting and audit judgements.
-- Internal control and risk content of the external auditor's report.
-- Independence of thought and potential for conflict.
(l) External Audito r Fees
All relevant fees proposed by the external auditor must be
reported to and approved by the Audit Committee. Details of
external audit fees may be found in note 8 to the consolidated
financial statements.
Policy for Non-Audit Services Provided by the External
Auditor
The main aims of this policy are to:
-- Ensure the independence of the auditor in performing the statutory audit; and
-- Avoid any conflict of interest by clearly detailing the types
of work that the auditor can and cannot undertake.
The Audit Committee has reviewed the policy for non-audit
services to ensure that it is in line with the FRC's Revised
Ethical Standards 2019 (which took effect from 15 March 2020) and
the FRC's Audit Quality Practice Aid 2019. The policy, in line with
regulation, substantially limits the non-audit services which can
be provided by the external auditor. The policy provides:
-- A 70% cap of the value of the audit fee for all non-audit
services calculated on a rolling three-year basis.
-- Categories of service that are prohibited from being carried out by the auditor.
The policy specifies a de minimis limit as well as the type of
non-audit work that the auditor may be engaged in without the
matter first being referred to the Audit Committee, which considers
each referral on a case-by-case basis. The policy ensures that the
auditor does not audit its own work or make management decisions
for the Company or any of its subsidiaries. The policy also
clarifies responsibilities for the agreement of fees payable for
non-audit work. No non-audit services were provided by MKS during
the year.
(m) Annual Review of the Internal Audit Function
The Company acknowledges non-compliance with Provision 26 due to
the absence of an internal audit function. The Board, after annual
reviews, considers an internal audit function to be
disproportionate given the size, complexity, and risk profile of
Oxford Cannabinoid Technologies (OCT) during the period. Instead,
internal assurance is maintained through robust governance, risk
management, and internal controls. The Audit Committee plays a key
role in overseeing risks, evaluating controls, and ensuring the
external audit's independence and effectiveness. The Committee also
liaises with the Remuneration Committee to incorporate risk
considerations in remuneration policies.
(n) Fraud Risk
The Company recognises internal fraud risk that with such a
small team there is limited segregation of duties that can be
operated. External fraud risk comes mainly from our R&D
suppliers and the Company operates a reasonable set of controls to
ensure goods and services have been received prior to payment, and
any changes in supplier details are checked before payments are
made. Fraud risk is not considered to be a corporate risk, but it
is considered at an operational risk level.
(o) Cyber and Information Security Risk
Together with hardware and software installation, maintenance
and management, the Company engages a 3(rd) party that holds
ISO270001 accreditation, to provide basic controls and mechanisms
to mitigate the likelihood and impact of a cyber security
attack.
(p) Whistleblowing
The Audit Committee is responsible for handling complaints
related to accounting, risk issues, internal controls, and auditing
matters. Reports are made to the Committee as necessary. The Board
oversees the Company's whistleblowing policy. It is noteworthy
that, to date, there have been no reports made to the
whistleblowing line. This reflects our commitment to maintaining a
transparent and accountable work environment where employees feel
safe and secure.
(q) Conflicts of Interest
In accordance with the Companies Act 2006, Directors are
obligated to avoid situations where there may be a conflict, or
potential conflict, between their duties to the Company and their
personal interests or other duties they owe to a third party.
Should a Director become aware that they, or a connected party,
have an interest in an existing or proposed transaction with the
Company, they are required to notify the Board as soon as
practicable. The Board has the authority to authorise such a
conflict if it is determined that doing so would be in the best
interests of the Company.
The Audit Committee reviews the output of this process annually
to ensure that conflicts of interest are appropriately monitored
and managed. This process is part of our commitment to maintaining
the highest standards of corporate governance and ensuring the
integrity of our operations.
Directors' report
The Directors have the pleasure of submitting their report and
the audited financial statements for the year ended 30 April 2023.
Comparative figures relate to the previous financial period of 11
months from 1 June 2021 to 30 April 2022.
To make our Annual Report and Accounts more accessible, a number
of the sections traditionally found in this report can be found in
other sections of the Annual Report and Accounts where it is deemed
that the information is presented in a more connected and
accessible way. The Directors' report comprises the sections
detailed below, including the statement on political donations and
R&D. Any sections that have been moved have been
cross-referenced below for ease of reference:
Located in the strategic report:
Principal Group activities, business review and results: The
principal activities of Oxford Cannabinoid Technologies and its
subsidiary can be found in this section.
Research and Development: The Group also has undertaken research
and development activities during the financial period and these
are detailed in the CSO's Review. The Directors consider the
investment in research to be fundamental to the success of the
business in the future.
Directors' statement of disclosure of information to the
auditor: This statement may be found in the Strategic Report.
Internal control and risk management arrangements: Internal
control arrangements information may be found in the Audit
Committee report. Risk management arrangements information may be
found in this section and in the Principal risks and uncertainties
section.
Located in the governance section:
2018 UK Corporate Governance Code (the 'Code'): Information on
how the Company applied the Principles and complied with the
provisions of the Code may be found in this section. A copy of the
Code can be accessed via www.frc.org.uk .
Diversity policies: The Group's Equality & Diversity Policy
are available in the Nominations Committee report.
Stakeholder engagement: Details regarding the engagement with
suppliers, regulators and others in business relationships with the
Company may be found in this section.
Employees: Information about the total number of employees and
gender diversity statistics are located in this section. The
average number of employees and their remuneration are shown in
note 7. The methods of engaging with the workforce may be found in
this section.
Located in the additional information section:
Dividend: The consolidated Statement of Comprehensive Income for
the year is set out towards the end of the Annual Report. No final
dividend is proposed (2022: GBPnil).
Annual General Meeting (AGM): Information about the AGM can be
found towards the end of the Annual Report. The recommendation to
reappoint MKS as the Group's auditor, can be found towards the end
of the Annual Report.
Share capital and substantial shareholdings : Information in
this regard can be found towards the end of the Annual Report.
Overseas subsidiaries : Information in this regard can be found
towards the end of the Annual Report.
Indemnity and Insurance: Details of Directors' Indemnity and
Insurance is located towards the end of the Annual Report.
Significant agreements: There are no significant agreements to
which the Company is a party that take effect, alter or terminate
upon a change of control of the Company following a takeover
bid.
Political donations
The Group made no political donations during the current year
and previous financial period. Nor has it made any contributions to
any non-UK political party during the current year or previous
financial period.
Non-financial reporting
Non-financial measures are an important part of our business and
we have consistently recognised the importance of non-financial
information in our annual reports. The Board is committed to acting
responsibly and working with our stakeholders to manage the social
and ethical impact of our activities. We aim to treat all our
stakeholders fairly and with integrity, as we explain in the
introduction to our sustainability matters report.
We have a number of Group policies to provide guidance to our
employees. The policies are designed to be easily understood and
they generally include examples of acceptable and unacceptable
behaviours.
By order of the Board
Rob Bennett
Company Secretary
30 August 2023
Financial Statements - OUR FINANCIAL PERFORMANCE
(a) Independent Auditor's Report to the members of Oxford Cannabinoid Technologies Holdings Plc
Disclaimer of opinion
We were engaged to audit the financial statements of Oxford
Cannabinoid Technologies Holdings Plc ('the Company') and its
subsidiary ('the Group') for the year ended 30 April 2023 which
comprise the Consolidated Statement of Comprehensive Income, the
Consolidated and Company Statements of Financial Position, the
Consolidated and Company Statements of Changes in Equity, the
Consolidated and Company Statements of Cash Flows, and notes to the
financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their
preparation is applicable law and UK adopted International
Accounting Standards.
We do not express an opinion on the financial statements of the
Group or the Company. Because of the significance of the matter
described in the basis for disclaimer of opinion section of our
report, we have not been able to obtain sufficient appropriate
audit evidence to provide a basis for an audit opinion on the
financial statements.
Basis for disclaimer of opinion
As disclosed in note 1 to the financial statements, the
financial statements of the Group and Company are prepared on the
assumption that the Group and Company will continue as a going
concern.
Whilst the Group is planning for the next round of funding, this
is not due to take place until the fourth quarter of 2023, market
conditions permitting. In the absence of, or in the event of a
delay in, obtaining any further debt or equity funding, the
existing cash funds held by the Group will be fully utilised by
April 2024. Whilst we acknowledge the Group remains on target with
the timescales set out for all four of its drug research and
development programmes, the Group's cash runway therefore extends
only 8 months beyond the date of approval of the financial
statements, assuming that the planned programme research remains
unchanged. Therefore, the Group may be unable to realise its assets
and discharge its liabilities in the normal course of business for
at least twelve months from the date of approval of the financial
statements.
The ability of management to raise further financing and to
successfully progress its drug research and development programmes
are key assumptions supporting the Directors' conclusions that it
is appropriate to prepare the financial statements of the Group and
Company on a going concern basis. Whilst we understand a financial
broker has been engaged to support the company and to proceed with
a transaction for an equity financing for the Company's cash
requirements, and the broker determines they have the capacity to
arrange the financing to an order of magnitude to allow the Group
and Company to continue to operate as a going concern based on
current cash flow projections, there has been no significant
progress as at the date of approval of the financial statements
towards actively identifying commitments from investors and the
ability to do so will be dependent on market conditions and
programme development at the time of the equity fund raise.
As a result, we have not been able to obtain sufficient
appropriate audit evidence to support the assumption that a
fundraising of sufficient magnitude is achievable within the
necessary timeframe to allow the Group and Company to continue to
operate as a going concern for at least twelve months from the date
of approval of the financial statements, Consequently we were
unable to obtain sufficient appropriate audit evidence to enable us
to form an audit opinion on these financial statements.
The financial statements do not reflect any adjustments that
would be required should the Group and Company be unable to
continue as a going concern.
Our approach to the audit
Our audit approach was a risk-based approach founded on a
thorough understanding of the Group's business, its environment,
and its risk profile. We conducted substantive audit procedures and
evaluated the Group's internal control environment. The components
of the Group were evaluated by the Group audit team based on a
measure of materiality, considering each component as a percentage
of the Group's total assets, current assets, and gross profit,
which allowed the Group audit team to assess the significance of
each component and determine the planned audit response.
We have evaluated two significant components - both the parent
Company and its subsidiary. A full scope audit was performed on the
financial statements of both components by the audit team. We
evaluated the controls in place at each component by performing
walkthroughs over the financial reporting systems identified as
part of our risk assessment. We also reviewed the accounts
production process and addressed critical accounting matters. We
then undertook substantive testing on significant classes of
transactions and material account balances.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current year and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the audit engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Key audit matter - Group How our scope addressed the
matter - Group
Going concern Our conclusions in respect
The Group is pre revenue and has of going concern have been
incurred a loss for the year of detailed in the Basis for
GBP5.945m (2022: GBP4.712m loss). Disclaimer of Opinion section
of our audit report.
Whilst the Group has no outstanding
borrowings as at 30 April 2023 (2022:
nil), its cash funds have decreased
in the year to GBP2.297m (2022:
GBP9.166m).
The directors have prepared cash
flow forecasts that show that, in
the absence of further debt or equity
funding, the existing cash funds
will be fully utilised by April
2024 (if current forecast levels
of project expenditure continue).
Given the trading performance in
the year, including the decrease
in cash funds, and the absence of
any further debt or equity financing,
the ability of the Group and Company
to continue in business as a going
concern was considered to be a key
audit risk area.
-------------------------------------------------------------
Key audit matter - Company How our scope addressed the
matter - Company
-------------------------------------------------------------
Valuation and classification of The scope of our work included,
investments in subsidiary undertakings but was not restricted to:
and valuation of amounts owed by * Critically assessing management's assessment of
subsidiary undertakings impairment including critically assessing the
external valuation used by management to support
The carrying value of investments their assessment;
in subsidiary undertakings recognised
in the Parent Company Statement
of Financial Position at 30 April * Critically assessing the competence and independence
2023 was GBP7.226m (2022: GBP7.226m) of the third party valuation expert;
and the total amount owed by the
Company's subsidiary undertakings
recognised in the Parent Company * Critically assessing the key underlying assumptions
Statement of Financial Position used in the valuation and obtaining and assessing
at 30 April 2023 was GBP1.917m (2022: documentation to support the assumptions;
GBP5.446m).
The directors are required to make * Performing sensitivity analysis on the valuation
an assessment to determine whether taking into consideration management's base and
the carrying value of investments downside scenarios;
and amounts owed by the subsidiary
undertakings are recoverable. Due
to the significance of the amounts * Critically assessing management's intercompany matrix
in question in the context of the to confirm that all intercompany balances have been
Company Statement of Financial Position, included and materially reconciled at 30 April 2023;
the carrying value of investments
and the recoverability of the amounts
owed were key risk areas for the * Critically assessing the cash flow model and the
audit of the Parent Company. judgements and estimates applied in the model which
support the ability of the subsidiary to generate
The directors are also required sufficient profits and cash flows to enable them to
to consider the classification of repay the amounts owed to the Company;
investments at the year end given
the novation of contracts from the
subsidiary undertaking in the year * Performing sensitivity analysis on the cash flow
to the parent company. model prepared by management taking into
consideration management's base and downside
The Company's disclosures in respect scenarios;
of investments, goodwill and amounts
owed by the subsidiary undertakings
are shown in notes 10, 13 and 15 * Critically assessing the factors which determine
to the financial statements. whether the investments should be reclassified as
goodwill following the novation of contracts to the
parent company;
--
* Challenging key assumptions as to why management
consider the amounts owed by subsidiary undertakings
to be recoverable;
* Critically assessing post year end trading and the
liquidity position of the subsidiary; and
* Evaluating the accounting policy and detailed
disclosures included in the financial statements to
confirm whether information provided in the financial
statements is compliant with the requirements of UK
adopted International Accounting Standards.
Key observations
Based on the work performed
we concluded that we agreed
with management's assertion
that no provision or impairment
was required against amounts
owed by the subsidiary undertaking
following a provision of GBP0.678m
that was recognised in the
prior financial year ended
30 April 2022.
We further concluded that
we agreed with management's
assertion that the investments
should be reclassified as
goodwill at 30 April 2023
as a result of the novation
of contracts referred to above.
We also concluded that we
agreed with management's assertion
that no impairment was required
against the carrying value
of goodwill.
We consider the disclosures
in the financial statements
to be acceptable.
-------------------------------------------------------------
Our application of materiality
The scope and focus of our audit engagement was influenced by
our assessment and application of materiality. We define
materiality as the magnitude of misstatement that could reasonably
be expected to influence the readers and the economic decisions of
the users of the financial statements. We use materiality to
determine the scope of our audit engagement and the nature, timing
and extent of our audit procedures and to evaluate the effect of
misstatements, both individually and on the financial statements as
a whole.
Due to the nature of the Group, we considered the loss for the
year to be the main focus for the readers of the financial
statements, and accordingly this consideration influenced our
judgement of materiality. Based on our professional judgement, we
determined materiality for the Group to be GBP117,000 based on a
percentage of loss for the year (2%). Based on our professional
judgement, we determined materiality for the Company to be
GBP115,000 based on a percentage of the loss for the year (2%).
On the basis of our risk assessment, together with our
assessment of the overall control environment, our judgement was
that performance materiality (i.e. our tolerance for misstatement
in an individual account or balance) for the Group and Company was
50% of materiality, namely GBP58,500 and GBP57,500
respectively.
We agreed to report to the Audit Committee all audit differences
in respect of the Group and Company in excess of GBP5,800 and
GBP5,700 respectively and, as well as differences below that
threshold that, in our view, warranted reporting on qualitative
grounds. We also reported to the Audit Committee on disclosure
matters that we identified when assessing the overall presentation
of the financial statements.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion the part of the Directors' Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Because of the significance of the matter described in the basis
for disclaimer of opinion section of our report, we have been
unable to form an opinion whether, based on the work undertaken in
the course of the audit:
-- the information given in the Strategic Report and the
Directors' Report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the Strategic Report and the Directors' Report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
Notwithstanding our disclaimer of opinion on the financial
statements, in the light of the knowledge and understanding of the
Group and the Company and their environment obtained in the course
of the audit, performed subject to the pervasive limitation
described above, we have not identified material misstatements in
the Strategic Report or the Directors' Report.
Arising from the limitation of our work referred to above:
-- we have not received all the information and explanations we require for our audit; and
-- we were unable to determine whether adequate accounting records have been kept.
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- returns adequate for our audit have not been received from branches not visited by us; or
-- the Company financial statements and the part of the
directors' remuneration report to be audited are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- a corporate governance statement has not been prepared by the Company.
Corporate governance statement
We have reviewed the directors' statement in relation to going
concern, longer-term viability and that part of the Corporate
Governance Statement relating to the entity's voluntary compliance
with the provisions of the UK Corporate Governance Code.
Because of the significance of the matter described in the basis
for disclaimer of opinion section of our report, we have been
unable to report as to whether the following statements are
appropriate:
-- The Directors' statement with regards the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified set out in the Going Concern and Viability
Statement;
-- The Directors' explanation as to its assessment of the
Group's prospects, the period this assessment covers and why the
period is appropriate set out in the Going Concern and Viability
Statement;
-- The Directors' statement on whether it has a reasonable
expectation that the Group will be able to continue in operation
and meet its liabilities set out in the Going Concern and Viability
Statement;
-- The Directors' statement on fair, balanced and understandable
set out in Other Directors' Statements.
Notwithstanding our disclaimer of opinion on the Group and
Company financial statements, based on the work undertaken as part
of our audit, we have concluded that each of the following elements
of the Corporate Governance Statement is materially consistent with
the financial statements and our knowledge obtained during the
audit:
-- The Board's confirmation that it has carried out a robust
assessment of the emerging and principal risks set out in the
Governance Report;
-- The section of the annual report that describes the review of
effectiveness of risk management and internal control systems set
out in the Strategic Report; and
-- The section describing the work of the Audit Committee set
out in the Audit Committee report.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group's and Company's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Group or the Company or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the audit of the financial
statements
Our responsibility is to conduct an audit of the Group's and
Company's financial statements in accordance with International
Standards on Auditing (UK) and to issue an auditor's report.
However, because of the matter described in the basis for
disclaimer of opinion section of our report, we were not able to
obtain sufficient appropriate audit evidence to provide a basis for
an audit opinion on these financial statements.
We are independent of the Group and Company in accordance with
the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC's Ethical
Standard, and we have fulfilled our other ethical responsibilities
in accordance with these requirements.
Explanation as to what extent the audit was considered capable
of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below.
The objectives of our audit in respect of fraud, are; to
identify and assess the risks of material misstatement of the
financial statements due to fraud; to obtain sufficient appropriate
audit evidence regarding the assessed risks of material
misstatement due to fraud, through designing and implementing
appropriate responses to those assessed risks; and to respond
appropriately to instances of fraud or suspected fraud identified
during the audit. However, the primary responsibility for the
prevention and detection of fraud rests with both management and
those charged with governance of the Company.
Our approach was as follows:
-- We obtained an understanding of the legal and regulatory
requirements applicable to the Company and considered that the most
significant are the Companies Act 2006, UK adopted International
Accounting Standards, the Listing Rules, the Disclosure Guidance
and Transparency Rules, and UK taxation legislation.
-- We obtained an understanding of how the Company complies with
these requirements by discussions with management and those charged
with governance.
-- We assessed the risk of material misstatement of the
financial statements, including the risk of material misstatement
due to fraud and how it might occur, by holding discussions with
management and those charged with governance.
-- We inquired of management and those charged with governance
as to any known instances of non-compliance or suspected
non-compliance with laws and regulations.
-- Based on this understanding, we designed specific appropriate
audit procedures to identify instances of non-compliance with laws
and regulations. This included making enquiries of management and
those charged with governance and obtaining additional
corroborative evidence as required.
-- We evaluated managements' incentives to fraudulently
manipulate the financial statements and determined that the
principal risks related to management bias in accounting estimates
and judgemental areas of the financial statements. We challenged
the assumptions and judgements made by management in respect of the
significant areas of estimation, as described in the key audit
matters section.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely
related to events and transactions reflected in the financial
statements. Also, the risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through
collusion.
Other matters which we are required to address
Following the recommendation of the Audit Committee, we were
reappointed by the Company's Annual General Meeting (AGM) on 28
September 2022 as auditor of the Company to hold office until the
conclusion of the next AGM of the Company. We were originally
appointed by the Audit Committee on 15 June 2021 to audit the
financial statements for the year ended 31 May 2021, and our total
uninterrupted period of engagement is three years covering periods
from our appointment through to the year ended 30 April 2023.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the Group or Company and we remain independent
of the Group and the Company in conducting our audit
engagement.
Our audit opinion is consistent with the additional report to
the Audit Committee.
Use of our report
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken for no purpose other than to
draw to the attention of the Company's members those matters which
we are required to include in an auditor's report addressed to
them. To the fullest extent permitted by law, we do not accept or
assume responsibility to any party other than the Company and
Company's members as a body, for our work, for this report, or for
the opinions we have formed.
Matthew Banton (Senior Statutory Auditor)
For and on behalf of Moore Kingston Smith LLP, Statutory
Auditor
6(th) Floor
9 Appold Street
London
EC2A 2AP
(b) Consolidated Statement of Comprehensive Income
Year ended Period ended
30 April 30 April
2023 2022
Notes GBP GBP
Revenue - -
Research costs (4,303,608) (2,891,497)
----------- ------------
Gross loss (4,303,608) (2,891,497)
Administrative expenses (2,670,151) (2,320,292)
Exceptional items 4 (63,850) (291,598)
----------- ------------
Operating loss 5 (7,037,609) (5,503,387)
Finance income 6 3,838 -
Finance costs 6 - -
----------- ------------
Loss before taxation (7,033,771) (5,503,387)
Income tax 9 1,088,721 791,058
----------- ------------
Loss for the year/period (5,945,050) (4,712,329)
Other comprehensive income
Items that may be reclassified to profit
or loss - -
----------- ------------
Total comprehensive loss for the year/period
attributable to owners of the Parent
Company arising from continuing operations (5,945,050) (4,712,329)
----------- ------------
Loss per share attributable to the
ordinary equity holders of the Company:
Basic loss per share from continuing
and total operations 5 (0.619p) (0.491p)
Diluted loss per share from continuing
and total operations 25 (0.619p) (0.491p)
(c) Consolidated Statement of Financial Position
30 April 30 April
2023 2022
Notes GBP GBP
Non-current assets
Intangible assets 10 7,272 46,080
Property, plant and equipment 11 - -
Right-of-use assets 12 - -
7,272 46,080
------------- -------------
Current assets
Trade and other receivables 15 2,191,133 2,606,616
Cash and cash equivalents 16 2,297,343 9,165,596
------------- -------------
4,488,476 11,772,212
------------- -------------
Total assets 4,495,748 11,818,292
------------- -------------
Current liabilities
Trade and other payables 17 583,920 2,025,264
Lease liabilities - -
Borrowings - -
------------- -------------
Total current liabilities 583,920 2,025,264
------------- -------------
Non-current liabilities
Borrowings - -
------------- -------------
Total non-current liabilities - -
------------- -------------
Total liabilities 583,920 2,025,264
------------- -------------
Net assets 3,911,828 9,793,028
------------- -------------
Equity
Called up share capital 18 9,604,156 9,604,156
Share premium account 18 11,877,466 11,877,466
Share based payment reserve 24 1,513,458 1,449,608
Other reserve 18 643,455 643,455
Retained earnings (19,726,707) (13,781,657)
------------- -------------
Total equity 3,911,828 9,793,028
------------- -------------
The financial statements were approved and authorised for issue
by the Board of Directors on 30 August 2023 and were signed on
behalf of by:
Paul Smalley
Finance Director
Company Registration No. 13179529
(d) Company Statement of Financial Position
30 April 30 April
2023 2022
Notes GBP GBP
Non-current assets
Intangible assets 10 7,233,436 46,080
Investment in subsidiary 13 - 7,226,164
--------------- ------------
7,233,436 7,272,244
--------------- ------------
Current assets
Cash and cash equivalents 16 104,569 2,122,992
Trade and other receivables 15 4,073,139 7,819,642
4,177,708 9,942,634
--------------- ------------
Total assets 11,411,144 17,214,878
--------------- ------------
Current liabilities
Trade and other payables 17 261,781 195,687
--------------- ------------
Total current liabilities 261,781 195,687
--------------- ------------
Net assets 11,149,363 17,019,191
--------------- ------------
Equity
Called up share capital 18 9,604,156 9,604,156
Share premium account 18 11,877,466 11,877,466
Share based payment reserve 24 1,376,924 1,313,074
Retained earnings (11, 709 ,183) (5,775,505)
--------------- ------------
Total equity 11,149,363 17,019,191
--------------- ------------
As permitted by section 408 of the Companies Act 2006, the
Parent Company's income statement has not been included in these
financial statements. The loss for the Parent Company was
GBP5,933,678 (2022: GBP5,365,258).
The financial statements were approved and authorised for issue
by the Board of Directors on 30 August 2023 and were signed on
behalf of the Board by:
Paul Smalley
Finance Director
Company Registration No. 13179529
(e) Consolidated Statement of Changes in Equity
Share Share based
premium payment Retained
Notes Share capital account reserve Other reserve earnings Total
GBP GBP GBP GBP GBP GBP
At 1 June 2021 9,604,156 11,877,466 1,158,010 643,455 (9,069,328) 14,213,759
------------- ------------ ------------ ------------- ------------- -----------
Loss for the period - - - - (4,712,329) (4,712,329)
Other comprehensive - - - - -
income
------------- ------------ ------------ ------------- ------------- -----------
Total comprehensive
loss - - - - (4,712,329) (4,712,329)
Transactions with
owners
Share-based payment
charge (warrants) 24 - - 202,953 - - 202,953
Share-based payment
charge (options) 24 - - 88,645 - - 88,645
Total transactions with
owners - - 291,598 - - 291,598
------------- ------------ ------------ ------------- ------------- -----------
Balance at 30 April
2022 9,604,156 11,877,466 1,449,608 643,455 (13,781,657) 9,793,028
------------- ------------ ------------ ------------- ------------- -----------
Share
based
Share Share premium payment Other Retained
capital account reserve reserve earnings Total
Notes GBP GBP GBP GBP GBP GBP
At 1 May 2022 9,604,156 11,877,466 1,449,608 643,455 (13,781,657) 9,793,028
(5, 945
Loss for the year - - - - (5,945,050) ,050)
Other comprehensive - - - - - -
income
--------- ------------- --------- --------- ------------ -----------
Total comprehensive
loss - - - - (5,945,050) (5,945,050)
Transactions with
owners
Share-based payment
charge (warrants) 24 - - 12,154 - - 12,154
Share-based payment
charge (options) 24 - - 51,696 - - 51,696
Total transactions
with owners - - 63,850 - - 63, 850
--------- ------------- --------- --------- ------------ -----------
Balance at 30 April 3,911,
2023 9,604,156 11,877,466 1,513,458 643,455 (19,726,707) 828
--------- ------------- --------- --------- ------------ -----------
(f) Company Statement of Changes in Equity
Share premium Share based payment
Share capital account reserve Retained earnings Total
Notes GBP GBP GBP GBP GBP
At 1 June 2021 9,604,156 11,877,466 1,021,476 (410,247) 22,092,851
Loss for the period - - - (5,365,258) (5,365,258)
------------- ------------------- ------------------- ----------------- -----------
Total comprehensive
loss for the period - - - (5,365,258) (5,365,258)
Transactions with
owners
Share-based payment
charge (options) 24 - - 202,953 - 202,953
Share-based payment
charge (warrants) 24 - - 88,645 - 88,645
------------- ------------------- ------------------- ----------------- -----------
Total transactions
with owners - - 291,598 - 291,598
------------- ------------------- ------------------- ----------------- -----------
Total equity at 30
April 2022 9,604,156 11,877,466 1,313,074 (5,775,505) 17,019,191
------------- ------------------- ------------------- ----------------- -----------
Share premium Share based payment
Share capital account reserve Retained earnings Total
Notes GBP GBP GBP GBP GBP
At 1 May 2022 9,604,156 11,877,466 1,313,074 (5,775,505) 17,019,191
Loss for the year - - - (5,933,678) (5,933,678)
Total comprehensive
loss - - - (5,933,678) (5,933,678)
Transactions with
owners
Share-based payment
charge (warrants) 24 - - 12,154 - 12,154
Share-based payment
charge (options) 24 - - 51,696 - 51,696
Total transactions
with owners - - 63,850 - 63,850
------------- -------------------- -------------------- ----------------- -----------
Balance at 30 April
2023 9,604,156 11,877,466 1,376,924 (11,709,183) 11,149, 363
------------- -------------------- -------------------- ----------------- -----------
(g) Consolidated Statement of Cash Flows
2023 2022
Notes GBP GBP
Cash flows from operating activities
Cash absorbed from operations 19a (7,042,074) (5,373,021)
Interest received 6 3,838 -
Tax refunded 9 169,983 -
----------- -----------
Net cash outflow from operating activities (6,868,253) (5,373,021)
----------- -----------
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment 11 - 2,500
Net cash inflow from investing activities - 2,500
----------- -----------
Cash flows from financing activities
Repayment of borrowings - (50,000)
Lease liability payments 12 - (44,684)
----------- -----------
Net cash outflow from financing activities - (94,684)
----------- -----------
Net decrease in cash and cash equivalents (6,868,253) (5,465,205)
Cash and cash equivalents at the beginning of the period 16 9,165,596 14,630,801
Cash and cash equivalents at end of the period 16 2,297,343 9,165,596
----------- -----------
(h) Company Statement of Cash Flows
2023 2022
Notes GBP GBP
Cash flows from operating activities
Cash absorbed from operations 19a (2,018,423) 2,122,992
----------- ---------
Net cash (outflow)/inflow from operating
activities (2,018.423) 2,122,992
----------- ---------
Net (decrease)/increase in cash and
cash equivalents (2,018,423) 2,122,992
Cash and cash equivalents at the beginning
of the period 2,122,992 -
Cash and cash equivalents at end of the
period 104,569 2,122,992
----------- ---------
Notes to the Financial Statements
1 General Information
Oxford Cannabinoid Technologies Holdings Plc is a public limited
company limited by shares, incorporated and domiciled in England
and Wales. Its registered office and principal place of business is
Prama House, 267 Banbury Road, Oxford OX2 7HT. Incorporated on 4
February 2021, the Company's shares were admitted to trading on the
London Stock Exchange on 21 May 2021.
All press releases, financial reports and other information are
available at our Shareholder Centre on our website:
www.oxcantech.com .
The consolidated financial statements are presented in Pound
Sterling (GBP) and have been rounded to the nearest pound.
2 Summary of Significant Accounting Policies
2(a) Basis of preparation
Compliance with IFRS
The consolidated and company financial statements of the Group
have been prepared in accordance with UK adopted International
Accounting Standards and interpretations issued by the IFRS
Interpretations Committee (IFRIC) applicable to companies reporting
under IFRS. The financial statements comply with IFRS as issued by
the International Accounting Standards Board (IASB).
Historical cost convention
The financial statements have been prepared on a historical cost
basis, unless stated otherwise in the accounting policies
below.
2(b) Principles of consolidation and equity accounting
The consolidated financial statements consolidate the Company
and its subsidiary undertakings drawn up to 30 April. Subsidiaries
are all entities over which the Company has control. The Group
controls an entity where the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the
activities of the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for
business combinations by the Group as detailed in note 2(c), except
as otherwise detailed. Inter-company transactions, balances and
unrealised gains on transactions between Group companies are
eliminated on consolidation. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the
transferred asset. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies
adopted by the Group.
2(c) Business combinations
The acquisition method of accounting is used to account for all
business combinations, regardless of whether equity instruments or
other assets are acquired. The consideration transferred for the
acquisition of a subsidiary comprises the:
-- fair values of the assets transferred;
-- liabilities incurred to the former owners of the acquired business;
-- equity interests issued by the Group;
-- fair value of any asset or liability resulting from a
contingent consideration arrangement; and
-- fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date.
Acquisition-related costs are expensed as incurred.
On 17 May 2021, in connection with the pre-IPO group
restructuring, the existing OCTL shareholders entered into a Share
Exchange Agreement with OCT, with OCT becoming the legal acquirer
of OCTL. The Group restructuring does not constitute a business
combination and consequently it is not a reverse acquisition as
defined in IFRS 3. However, although the transaction is outside of
the scope of IFRS 3 it has been accounted for on a similar basis,
as detailed in guidance issued by the IFRS Interpretations
Committee . Other reserves represent the value of shares obtained
in excess of the par value under the share for share exchange
agreement.
2(d) Going concern
The Directors are required to satisfy themselves that it is
reasonable for them to conclude whether it is appropriate to
prepare the financial statements on a going concern basis, and as
part of that process they have followed the Financial Reporting
Council's guidelines ("Guidance on the Going Concern Basis of
Accounting and Reporting on Solvency and Liquidity Risk" issued
April 2016).
The Group's business activities together with factors that are
likely to affect its future development and position are set out in
the Chair's Statement, the CEO's Review and Financial Review.
Budgets and detailed cashflow forecasts that look beyond twelve
months from the date of these consolidated financial statements
have been prepared and used when considering the Group's ability to
meet its liabilities as they fall due, without raising further
funding. The Directors have made various assumptions in preparing
these forecasts, using their view of both the current and future
economic conditions that may impact on the Group during the
forecast period.
As detailed in the Directors' Report, the Board have, however,
identified that a material uncertainty exists on the Company's
ability to continue as a going concern in relation to working
capital. The Company's cash runway will only extend eight months
beyond signing these financial statements and therefore, the
Company may be unable to realise its assets and discharge its
liabilities in the normal course of business without a further
fundraise within the next eight months. The Board is planning on
raising additional funds within this period to provide further
financial resources in order to progress with the next stages of
the research programmes. Whilst preparations are in progress for
this fundraise, alternative options for short to medium term
financing are also being considered. Further controls over
discretionary spend will be implemented to extend the current cash
resources if required. Given the mitigating controls that are in
place for a successful fundraise and the strength of controls that
exist over cash management (as detailed in Principal Risks and
Uncertainties), the Board are confident that preparing the
financial statements on a going concern basis remains
appropriate.
Key risks and potential scenarios that could negatively impact
on the Group's ability to continue to research and ultimately
develop and retail prescribed medicines within the timescales
previously presented have been considered. The signing of the
agreement with Evotec for one of the Group's leading drug
candidates (OCT 461201) is an example of where the Directors have
actively managed some key external risk factors by selecting a
partner who offers an integrated drug development process, with
acceleration through to clinical trial stage.
The Directors have also considered the impact of the COVID-19
pandemic. Due to the nature of the Group's activities, there has
not been a significant on-going impact on the business .
Nonetheless, the Directors have taken steps to mitigate the impact
including entering into agreements with CROs that, where possible,
place responsibility for any delays with the other party.
After making enquiries including detailed consideration of the
Group's cashflow, solvency and liquidity position, the Board has a
reasonable expectation that OCT, OCTL and the Group as a whole have
adequate resources to continue in operational existence for at
least twelve months (with significant changes to the programme
spend or with further fundraising) from the date of signing of
these financial statements. As such, the Board continues to adopt
the going concern basis in preparing the consolidated financial
statements and annual report.
2(e) Foreign currency translation
Items included in the consolidated financial statements of each
of the Group's entities are measured using Pound Sterling, which is
the Group's functional and presentation currency.
Foreign currency transactions are translated into the functional
currency using the exchange rates at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of
such transactions, and from the translation of monetary assets and
liabilities denominated in foreign currencies at period end
exchange rates, are generally recognised in the Statement of
Comprehensive Income.
2(f) Research & development costs
Prior to achieving regulatory approval, all expenditure on
research activities is recognised as an expense in the period in
which it is incurred. Once such approval is obtained, expenditure
can then be recorded as an internally generated intangible asset
arising from the Group's development activities if the following
conditions can be demonstrated, in accordance with IAS 38
Intangible Assets:
-- the technical feasibility of completing the intangible asset
so that it will be available for use or sale;
-- the intention to complete the intangible asset and use or sell it;
-- the ability to use or sell the intangible asset;
-- how the intangible asset will generate probable future economic benefits;
-- the availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible asset; and
-- the ability to measure reliably the expenditure attributable
to the intangible asset during its development.
2(g) Tax
Income tax
Current tax payable is based on taxable profit for the period.
The Group's liability for current tax is calculated using the main
corporation tax rate for the period.
The Group is entitled to claim special tax deductions for
qualifying expenditure (i.e. the Research and Development Tax
Incentive regime in the UK). The Group accounts for such allowances
as tax credits, which reduces income tax payable and current tax
expense.
Tax expense recognised in profit or loss comprises the sum of
deferred tax and current tax not recognised in other comprehensive
income or directly in equity.
Deferred tax
Deferred income taxes are calculated using the liability method
on temporary differences. This involves the comparison of the
carrying amount of assets and liabilities in the consolidated
financial statements with their respective tax bases used in the
computation of taxable profit.
Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. However, deferred tax is not provided on the
initial recognition of goodwill, or on the initial recognition of
an asset or liability unless the related transaction is a business
combination or affects tax or accounting profit. Deferred tax on
temporary differences associated with investments in subsidiaries
is not provided if reversal of these temporary differences can be
controlled by the Group and it is probable that reversal will not
occur in the foreseeable future.
The amount of deferred tax provided is based on the expected
manner of recovery or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted
at the reporting date.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Given the Company and Group are several years away from
generating a taxable profit, no deferred tax asset is recognised in
respect of trading losses. Deferred tax liabilities are always
provided for in full and are calculated at tax rates that are
expected to apply to their respective period of realisation,
provided they are enacted or substantively enacted at the balance
sheet date.
2(h) Leases
Until 2 April 2022, the Group leased the head office in London
under a five year lease period and office equipment. The latter are
short term leases of low value assets and as such were accounted
for as operating leases, all of which had ended by 31 March
2022.
Contracts may contain both lease and non-lease components. The
Group allocates the consideration in the contract to the lease and
non-lease components based on their relative stand-alone prices.
However, for the lease of premises for which the Group is a lessee,
it has elected not to separate lease and non-lease components and
instead has accounted for this as a single lease component.
Lease terms are negotiated on an individual basis. The lease
agreements do not impose any covenants other than the security
interests in the leased assets that are held by the lessor. Leased
assets are not used as security for borrowing purposes.
Lease payments are discounted using the Group's incremental
borrowing rate, being the rate that the individual lessee would
have to pay to borrow the funds necessary to obtain an asset of
similar value to the right-of-use asset in a similar economic
environment with similar terms, security and conditions.
To determine the incremental borrowing rate the Group:
-- uses the monthly average of UK resident banks' sterling
weighted interest rate on 'other loans, new advances to SMEs' as a
basis;
-- uses a build-up approach adjusting for credit and any
currency risk, economic factors and property yields for commercial
property in the local area;
-- benchmarks against similar companies that are also
pre-revenue, of a similar scale and sector; and
-- makes adjustments specific to the lease, e.g. term and currency.
An incremental borrowing rate of nil (2022: 5.31%) was
calculated and applied in determining right-of-use costs and asset
value.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the fixed payments (including in-substance
fixed payments), less any lease incentives receivable. Lease
payments to be made under reasonably certain extension options are
also included in the measurement of the liability.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease period
so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability;
-- any lease payments made at or before the commencement date
less any lease incentives received;
-- any initial direct costs, and
-- restoration costs.
Right-of-use assets are depreciated over the shorter of the
asset's useful life and the lease term on a straight-line basis.
The Group has chosen not to revalue right-of-use assets held by the
Group.
The lease term is reassessed if an option is actually exercised
(or not exercised) or the Company becomes obliged to exercise (or
not exercise) it. The assessment of reasonable certainty is only
revised if a significant event or a significant change in
circumstances occurs, which affects this assessment, and that is
within the control of the lessee.
2(i) Impairment of assets
Intangible assets that have an indefinite useful life are not
subject to amortisation and are tested annually for impairment, or
more frequently if events or changes in circumstances indicate that
they might be impaired. Other assets are tested for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount, and is recorded as an exceptional
item. The recoverable amount is the higher of an asset's fair value
less costs of disposal and value in use.
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
inflows which are largely independent of the cash inflows from
other assets or groups of assets (cash-generating units).
Non-financial assets that suffered an impairment are reviewed for
possible reversal of the impairment at the end of each reporting
period.
2(j) Cash and cash equivalents
For the purpose of presentation in the statement of cash flows,
cash and cash equivalents includes cash on hand, deposits held at
call with financial institutions, other short-term, and highly
liquid investments with original maturities of three months or less
that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value. There are no
bank overdraft arrangements.
2(k) Other financial assets
The Group classifies its financial assets in the following
measurement categories:
-- those to be measured subsequently at fair value (either
through Other Comprehensive Income or through profit or loss);
and
-- those to be measured at amortised cost.
The classification depends on the entity's business model for
managing the financial assets and the contractual terms of the cash
flows.
For assets measured at fair value, gains and losses will either
be recorded in profit or loss or Other Comprehensive Income. For
investments in equity instruments that are not held for trading,
this will depend on whether the Group has made an irrevocable
election at the time of initial recognition to account for the
equity investment at fair value through other comprehensive income
(FVOCI).
Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or have been
transferred and the Group has transferred substantially all the
risks and rewards of ownership.
At initial recognition, the Group measures a financial asset at
its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVTPL), transaction costs that are
directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVTPL are expensed
in profit or loss.
2(l) Property, plant and equipment
Property, plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of any component accounted for as a
separate asset is derecognised when replaced. All other repairs and
maintenance are charged to profit or loss during the reporting
period in which they are incurred.
Depreciation is calculated using the straight-line method to
allocate the cost (or, if applicable, revalued amounts) of the
assets, net of any residual values, over the lease term for
leasehold improvements and estimated useful lives for office and
computer equipment:
Leasehold improvements 5 years
Office equipment 5 years
Computer equipment 5 years
Each year, the difference between depreciation based on the cost
(or, if applicable, revalued carrying amount) of the asset charged
to profit or loss and depreciation based on the asset's original
cost, net of tax, is reclassified from the property, plant and
equipment revaluation surplus to retained earnings.
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in profit or
loss.
2(m) Intangible assets
Intangible assets are stated at cost less amortisation and are
reviewed for impairment whenever there is an indication that the
carrying value may be impaired.
Intangible assets are comprised of licence fees paid for the use
of trademarks on compounds being developed. Such assets are defined
as having finite useful lives and the Group amortises the costs
using the straight-line method over the estimated useful life of
five years. The charge for amortisation is included within
administrative expenses.
2(n) Trade and other payables
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial period
which are unpaid. The amounts are unsecured and are usually paid
within 30 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due within
12 months after the reporting period. They are recognised initially
at their fair value and subsequently measured at amortised cost
using the effective interest method.
2(o) Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the
effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw-down
occurs. To the extent there is no evidence that it is probable that
some or all of the facility will be drawn down, the fee is
capitalised as a prepayment for liquidity services and amortised
over the period of the facility to which it relates.
Borrowings are removed from the balance sheet when the
obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial
liability that has been extinguished or transferred to another
party and the consideration paid, including any non- cash assets
transferred or liabilities assumed, is recognised in profit or loss
as other income or finance costs.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting period.
2(p) Provisions
Provisions for any legal claims are recognised when the Group
has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be
required to settle the obligation, and the amount can be reliably
estimated. Provisions are not recognised for future operating
losses.
Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be
small.
Provisions are measured at the present value of management's
best estimate of the expenditure required to settle the present
obligation at the end of the reporting period. The discount rate
used to determine the present value is a pre-tax rate that reflects
current market assessments of the time value of money and the risks
specific to the liability. The increase in the provision due to the
passage of time is recognised as interest expense.
2(q) Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary
benefits, annual leave and accumulating sick leave that are
expected to be settled wholly within 12 months after the end of the
period in which the employees render the related service are
recognised in respect of employees' services up to the end of the
reporting period and are measured at the amounts expected to be
paid when the liabilities are settled. Leave obligations are
calculated by multiplying the average days of outstanding leave at
the period end by the daily salary rate of the employee concerned.
The liabilities are presented as current employee benefit
obligations in the balance sheet.
Other long-term employee benefit obligations
There are no other long-term employee benefit obligations.
Post-employment obligations
The Group operates one post-employment scheme, a defined
contribution pension plan available to all employees. The Group
pays contributions to publicly or privately administered pension
insurance plans on a mandatory, contractual or voluntary basis. The
Group has no further payment obligations once the contributions
have been paid. The contributions are recognised as an employee
benefit expense when they are due. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a
reduction in the future payments is available.
Share-based payments
Share-based compensation benefits are provided to employees via
the Group Employee Option Plan, an employee share scheme, the
executive short-term incentive scheme and share appreciation
rights. Information relating to these schemes is set out in note
26.
Employee options
The fair value of options granted under the Group Employee
Option Plan is recognised as an employee benefit expense, with a
corresponding increase in equity. The total amount to be expensed
is determined by reference to the fair value of the options
granted:
-- including any market performance conditions (e.g. the Company's share price);
-- excluding the impact of any service and non-market
performance vesting conditions (e.g. profitability, sales growth
targets and remaining an employee of the entity over a specified
time period); and
-- including the impact of any non-vesting conditions (e.g. the
requirement for employees to save or hold shares for a specific
period of time).
The total expense is recognised over the vesting period, which
is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each period, the entity revises
its estimates of the number of options that are expected to vest
based on the non-market vesting and service conditions. It
recognises the impact of the revision to original estimates, if
any, in profit or loss, with a corresponding adjustment to
equity.
The Employee Option Plan is accounted for as detailed in note
26. When the options are exercised, the appropriate amount of
shares are transferred to the employee. The proceeds received, net
of any directly attributable transaction costs, are credited
directly to equity.
Bonus plans
Where contractually obliged or where there is a past practice
that has created a constructive obligation to give staff bonuses,
the Group recognises a liability and an expense for bonuses based
on a formula that takes into consideration certain financial and
operational objectives.
2(r) Contributed equity
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds. The
excess of the proceeds from share issues over the par value is
classified as a share premium account. The other reserve represents
the difference on consolidation between the value of the shares
issued and the value of shares acquired by the Company in its
acquisition of OCTL in May 2021. The Share- based payment reserve
represents the fair value of equity-settled share-based payment
transactions as detailed in note 26.
2(s) Dividends
Provision is made for the amount of any dividend declared, being
appropriately authorised and no longer at the discretion of the
entity, on or before the end of the reporting period but not
distributed at the end of the reporting period.
2(t) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
-- the profit or loss attributable to owners of the Group,
excluding any costs of servicing equity other than ordinary shares;
and
-- by the weighted average number of ordinary shares outstanding
during the financial period, adjusted for bonus elements in
ordinary shares issued during the period.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account:
-- the after-income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares; and
-- the weighted average number of additional ordinary shares
that would have been outstanding assuming the conversion of all
dilutive potential ordinary shares.
2(u) Exceptional items
Exceptional items comprise costs that are considered by the
Directors not to relate to the day to day financial performance of
the Group. These are costs incurred by the Group that are
considered by the Directors to be material in size and are unusual
or infrequent in occurrence which require separate disclosure
within the consolidated financial statements. They include one-off
transactions and non-cash items such as the share-based payment
charge.
2(v) Segmental Reporting
Operating segments are reported in a manner consistent with the
internal reporting to the chief operating decision-maker (CODM).
The CODM, who is responsible for allocating resources and assessing
performance, has been identified as the Board of Directors. The
Directors consider that, as the Group is non-revenue generating,
there is only one operating segment and consequently no segmental
analysis is required.
2(w) Government grants
Government grants are recognised in the Consolidated Statement
of Comprehensive Income so as to match with the related expenses
that they are intended to compensate. It is considered whether
there are any conditions for the funding to be refunded. The amount
allocated as a government grant (in the form of a tax credit) is
determined by reference to the specific agreed costs and activities
identified as meeting the criteria under the government scheme for
research and development expenditure. Government grants are
recorded as an offset to the relevant expense in the Consolidated
Statement of Comprehensive Income and are capped to match the
relevant costs incurred.
2(x) New and forthcoming standards and interpretations
There were no new or amended standards adopted in the year that
were relevant to the Group.
New standards and interpretations not yet adopted
A number of new accounting standards, amendments to accounting
standards and interpretations have been issued by the International
Accounting Standards Board with an effective date after the date of
these financial statements. The Directors have chosen not to early
adopt these standards and interpretations, and the Directors do not
expect them to have a material impact on the entity in the current
or future reporting periods and on foreseeable future
transactions.
Effective
date
IAS 1 Presentation of Financial Statements - amendments
regarding the disclosure of accounting policies 1 January
2023
IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors - amendments regarding 1 January
the definition of accounting estimates 2023
IAS 12 Deferred Tax related to Assets and Liabilities 1 January
arising from a Single Transaction 2023
IFRS 17 Comparative Information 1 January
& 9 2023
IAS 1 Presentation of Financial Statements - amendments 1 January
regarding the classification of liabilities 2024
IAS 1 Presentation of Financial Statements - amendments 1 January
regarding the non- current liabilities with 2024
covenants
IFRS 16 Lease Liability in a Sale and Leaseback 1 January
2024
3 Critical Estimates and Judgements
The preparation of financial statements requires the use of
accounting estimates which, by definition, will seldom equal the
actual results. Management also needs to exercise judgement in
applying the Group's accounting policies. However uncertainty about
these assumptions and estimates could result in outcomes that would
require a material adjustment to the carrying amount of the asset
or liability in future periods.
Estimates and judgements are continually evaluated. They are
based on historical experience and other factors, including
expectations of future events that may have a financial impact on
the entity and that are believed to be reasonable under the
circumstances. The areas involving significant estimates or
judgements which management consider may have a significant risk of
causing a material adjustment to the reported amounts in the period
were:
Going concern basis
As outlined in note 2(d), judgement has been applied in
accounting for the Group as a going concern. In reaching the
decision the Directors have considered current cash reserves and
forecast cashflows, solvency and liquidity, particularly with
regard to the cash resources expected to be fully utilised by April
2024.The forecasts are based on various assumptions including a
successful fundraising within the next 8 months, charges from
research partners, rate of progression through to
commercialisation, and external economic conditions.
There is a material uncertainty over the Group's ability to
realise its assets and discharge its liabilities in the normal
course of business, without a further fundraise within the next 8
months. Given the level of mitigating controls in place over the
risks involving fundraising and cash management (as detailed in
Principal Risks and Uncertainties), the Board currently believe
that preparing the financial statements on a going concern basis
remains appropriate.
Research & development costs
Judgement is used in the classification and hence treatment of
costs incurred in the research and development of the core
programmes outlined in the CSO's Review. During the year all of the
GBP4,303, 608 costs incurred were accounted for as research costs
and expensed to profit or loss, on the basis that none of the
programmes were yet at a stage of having gained regulatory approval
for commercialisation (and hence having a measurable future
economic benefit).
R&D tax credits receivable
Judgement is applied in calculating the tax credits that the
Group consider to be receivable from HMRC in relation to research
costs incurred. Evidence is retained to support the methodology
adopted by the Group in calculating R&D tax relief claims, part
of which involves the judgement of experienced senior managers and
Directors in articulating the scientific advancements and
uncertainties for the wider market of the Group's research
programmes based on contemporaneous evidence. The tax credit
receivable of GBP 1, 848,447 is detailed in note 15.
Impairment of intangible fixed assets
Judgement is involved in determining the useful economic life
and potential impairment of the goodwill. This includes
consideration of the continuing likelihood of the asset to generate
value to the Group or any other event which may have a detrimental
effect on the carrying value of the asset.
Warrants and share options
The Black-Scholes model is used to calculate the appropriate
charge of the warrants and share options. The calculation involves
a number of estimates and judgements to establish the appropriate
inputs to be entered into the model, including the use of an
appropriate interest rate, expected volatility, exercise
restrictions and behavioural considerations. A significant element
of judgement is therefore involved in the calculation of the
charge. In the financial year the charge was GBP63,850 (2022:
GBP291,598) as shown in note 4.
4 Exceptional Items
The Consolidated Statement of Comprehensive Income includes
exceptional items totalling GBP63,850 (2022: GBP291,598) comprised
of:
Year ended Period ended
30 April 30 April 2022
2023
Note GBP GBP
Share-based payment charge 24 63,850 291,598
63,850 291,598
---------- --------------
Share-based payment charge
As detailed in note 24, the Group operates two share option
schemes for its Directors and senior employees one relating to
options transferred from OCTL and a new scheme for OCT. In
addition, warrants were issued as part of the listing in May 2021,
a charge of GBP51,696 (2022: GBP202,953) which is included within
the total charge for the current period.
5 Operating Loss
Operating loss is stated after charging / (crediting):
Year ended Period
30 April ended 30
2023 April
2022
GBP GBP
Depreciation of property, plant
and equipment - 12,143
Amortisation of right-of-use
assets - 10,565
Amortisation of intangible
assets 38,808 35,577
Impairment of intangible assets - 20,000
Gain on release of right-of-use
assets - (79,202)
Operating lease rentals - 2,494
Share based payment charge 63,850 291,598
Foreign exchange loss 22,594 25,694
6 Finance Income and Finance Costs
Year ended Period ended
30 April 30 April
2023 2022
GBP GBP
Finance income 3,838 -
Finance costs - -
---------- ------------
3,838 -
---------- ------------
Finance income
This relates to interest received on bank accounts.
7 Employees
The monthly average number of employees was 7 (2022: 7), which
excludes Non-Executive Directors.
2023 2022
Number Number
----------- -----------
Research 2 2
Management 5 5
----------- -----------
Total number of employees 7 7
----------- -----------
Their aggregate remuneration, including Executive Directors'
remuneration, comprised:
Year ended Period ended
30 April 30 April
2023 2023
GBP GBP
Wages and salaries 1,058,240 817,671
Pension 98,727 85,634
Social security costs 149,317 121,564
Share based payments 51,696 88,645
1,357,980 1,113,514
------------- --------------
Details of Directors' emoluments, share options and pension
entitlements are given in the Directors' Remuneration Report.
Employee Benefit Obligations
30 April 30 April
2023 2022
GBP GBP
Leave obligations 15,043 11,731
-------- --------
Total employee benefit obligations 15,043 11,731
-------- --------
The leave obligations cover the Group's liabilities for annual
leave which are classified as short-term benefits, as explained in
note 2(q). The liability comprises all of the accrued annual leave,
with the entire amount of the provision presented as current, since
the Group does not have an unconditional right to defer settlement.
However, based on past experience, the Group does not expect all
employees to take the full amount of accrued leave or require
payment within the next 12 months.
The Group operates a defined contribution pension plan which
receives fixed contributions from Group companies. The Group's
legal or constructive obligation for these plans is limited to the
contributions. The expense recognised in the current period in
relation to these contributions was GBP98,727 (2022:
GBP85,634).
Medical insurance is provided to all current employees. The
expense recognised in the current period in relation to these costs
was GBP6,138 (2022: GBP4,970).
There are no post-employment obligations.
8 Auditor's Remuneration
During the period, the Group incurred the following costs in
respect of services provided by the auditor:
Year Period
ended 30 ended 30
April April
2023 2022
GBP GBP
Fees payable to the Company auditor for
the audit of the parent company 79,553 72,500
Fees payable to the Company auditor for
further services:
* audit of Company's subsidiaries pursuant to
legislation 12,650 12,500
* other services pursuant to legislation 6,122 10,475
9 Income Tax
The Group is pre-revenue generating, but on target to gain
regulatory approval of its first product during 2027. The Group
benefits from research and development corporation tax relief in
both the current year and prior periods claimed on allowable
research expenditure.
A deferred tax asset of approximately GBP3,884,180 (2022:
GBP2,125,737) relating to carried forward losses of GBP15,536,719
(2022: GBP8,502,949) has not been recognised due to the uncertainty
of the timing of future taxable profits.
The deferred tax assets have been calculated at 25%
(2022:25%).
Year ended Period Ended
30 April 30 April
2023 2022
GBP GBP
Current tax credit
UK corporation tax on loss for the current
period (1,088,721) (759,726)
Adjustment from previous periods - (31,332)
------------ -------------
UK corporation tax on loss (1,088,721) (791,058)
------------ -------------
The income tax credit differs from the theoretical credit arising
from applying UK corporate tax rates to the loss for the reasons
below:
Loss before taxation (7,033,771) (5,503,387)
Expected tax based on a corporation tax rate
of 19% (2022: 19%) (1,336,416) (1,045,644)
Effect of expenses not deductible in determining
taxable profit 24,821 94,423
Effect of income not taxable in determining
taxable profit - (16,265)
Depreciation in excess of capital allowances - 13,165
Losses carried forward 659,179 403,865
Enhanced research and development relief
utilised (996,603) ( 550,456)
Losses surrendered for R&D tax credit 1,500,557 973,884
Research and development tax credit (1,088,721) (759,726)
Adjustment from previous periods - (31,332)
Rate difference between CT rate and R&D repayment
rate 148,462 127,028
------------ -------------
Taxation credit for the year/period (1,088,721) (791,058)
------------ -------------
10 Intangible Assets
Group
Licences Total
GBP GBP
Cost 155,245 155,245
At 1 June 2021
Additions - -
----------- ----------
At 30 April 2022 155,245 155,245
Additions - -
At 30 April 2023 155,245 155,245
Amortisation
At 1 June 2021 53,588 53,588
Charge in year 35,577 35,577
Impairment 20,000 20,000
----------- ----------
At 30 April 2022 109,165 109,165
Charge in year 38,808 38,808
At 30 April 2023 147,973 147,973
----------- ----------
Net book value at 30 April 2022 46,080 46,080
----------- ----------
Net book value at 30 April 2023 7,272 7,272
----------- ----------
Company Total
Goodwill Licences GBP
GBP GBP
Cost
At 1 June 2021 - - -
Transfer from subsidiary - 155,245 155,245
----------- ----------- ----------
At 30 April 2022 - 155,245 155,245
Transfers from investments (note
13) 7,226,164 - 7,226,164
At 30 April 2023 7,226,164 155,245 7,381,409
Amortisation
At 1 June 2021 - - -
Transfer from subsidiary - 53,588 53,588
Charge in year - 35,577 35,577
Impairment - 20,000 20,000
----------- ----------- ----------
At 30 April 2022 - 109,165 109,165
Charge in year - 38,808 38,808
At 30 April 2023 147,973 147,973
----------- ----------- ----------
Net book value at 30 April 2022 - 46,080 46,080
----------- ----------- ----------
Net book value at 30 April 2023 7,226,164 7,272 7,233,436
----------- ----------- ----------
The Directors have undertaken a detailed impairment review of
licences in the current period and as a result of this process no
impairment has been identified as being required as at 30 April
2023. In addition, the Directors have undertaken a review of
investments and as a result of this process and valuation, the
investment has been reclassified as goodwill. No impairment has
been identified as being required as at 30 April 2023.
11 Property, Plant and Equipment
Leasehold Office equipment Computer
improvements equipment Total
Group GBP GBP GBP GBP
------------- ---------------- ---------- --------
Cost
At 1 June 2021 57,182 14,201 7,929 79,312
Disposals (57,182) (14,201) (7,929) (79,312)
------------- ---------------- ---------- --------
At 30 April 2022 - - - -
------------- ---------------- ---------- --------
At 30 April 2023 - - - -
Depreciation
At 1 June 2021 22,413 6,519 3,554 32,486
Charge in period 8,812 2,142 1,189 12,143
Disposals (31,225) (8,661) (4,743) (44,629)
------------- ---------------- ---------- --------
At 30 April 2022 - - - -
------------- ---------------- ---------- --------
At 30 April 2023 - - - -
------------- ---------------- ---------- --------
Net book value at 30 - - - -
April 2023/30 April
2022
------------- ---------------- ---------- --------
The Company held no fixed assets at 30 April 2023 or 30 April
2022.
All fixed assets were disposed of as part of the termination of
the lease on the London office on 2 April 2022, with a net loss on
disposal of GBP32,183.
12 Right-of-Use Assets
This note provides information for leases where the Group is a
lessee. The Group does not act as a lessor in any capacity.
30 April 2023 30 April 2022
Group GBP GBP
Cost
At 1 May 2022/ 1 June 2021 - 174,116
Adjustment to IFRS 16 recognition - -
Disposals - (174,116)
-------------- -------------
At 30 April 2023 / 30 April 2022 - -
Amortisation
At 1 May 2022/ 1 June 2021 - 163,551
Charge in period - 10,565
Disposals - (174,116)
-------------- -------------
At 30 April 2023 / 30 April 2022 - -
Net book value at 30 April 2023 / 30 April 2022 - -
-------------- -------------
The right-of-use asset was comprised of one lease on the head
office building, which commenced in April 2019 for five years and
was terminated on 2 April 2022.
The Consolidated Statement of Comprehensive Income shows the
following amounts relating to leases:
30 April 30 April
2023 2022
Notes GBP GBP
Amortisation charge of right-of-use assets
Leased head office 5 - 10,565
Interest expense (included in finance
costs) 6 - -
The total cash outflow for leases in the period was GBPnil
(2022: GBP44,684).
Short term and low value leases
Under IFRS 16 short term and low value leases can be accounted
for as operating leases. As such, costs for short term leases for
low value office equipment have therefore been expensed in the year
, as detailed in note 5.
13 Investments
Investments
Company 30 April 30 April 2022
2023 GBP
GBP
At 1 May 2022/ 1 June 2021 7,226,164 7,226,164
Transfer to goodwill (note 10) (7,226,164) -
------------ --------------
At 30 April 2023 / 30 April 2022 - 7,226,164
The Group's subsidiary at 30 April 2023 is set out below. The
share capital consists of ordinary shares that are held directly by
the Group, and the proportion of ownership interests held equals
the voting rights held by the Group. The country of incorporation
or registration is also their principal place of business.
Ownership
Place of business / Interest held by Group Indirect or Indirect
Name and address of country of
Entity incorporation Principal Activity
%
----------------------- ---------------------- ---------------------- -------------------- -----------------------
Oxford Cannabinoid England and Wales 100 Direct Pharmaceutical research
Technologies Ltd
Prama House, 267
Banbury Rd,
Oxford OX2 7HT
The Directors have undertaken a detailed review in the current
period and as a result of this process and assessment of valuation,
the investment has been reclassified as goodwill. No impairment has
been identified as being required as at 30 April 2023.
14 Financial Assets and Financial Liabilities
The Group holds the following financial instruments: 30 April 30 April
2023 2022
Notes GBP GBP
Financial assets at amortised cost
Cash and cash equivalents 16 2,297,343 9,165,596
Other receivables 15 46,475 35,996
--------- ---------
2,343,818 9,201,592
Liabilities at amortised cost
Trade and other payables 17 583,920 2,025,264
583,920 2,025,264
--------- ---------
The maximum exposure to credit risk at the end of the reporting
period is the carrying amount of each class of financial assets
mentioned above.
15 Trade and Other Receivables
Group Company
30 April 30 April 30 April 30 April
2023 2022 2023 2022
GBP GBP GBP GBP
Prepayments and accrued
income 254,676 1,472,316 254,676 1,472,310
Tax credit receivable (note
3) 1,848,447 929,709 1,848,447 759,726
VAT recoverable 41,535 168,595 6,259 105,313
Amounts due from group undertakings - - 1,917,293 5,446,307
Other receivables 46,475 35,996 46,464 35,986
--------- --------- ----------- ---------
2,191,133 2,606,616 4,073,139 7,819,642
--------- --------- ----------- ---------
The inter-company balance between OCT and its subsidiary OCTL is
unsecured, interest-free and repayable on demand. The balance
includes a provision as detailed in note 23.
16 Cash and Cash Equivalents
Group Company
30 April 30 April 30 April 30 April
2023 2022 2023 2022
GBP GBP GBP GBP
Cash at bank and in hand 2,297,343 9,165,596 104,569 2,122,992
--------- --------- -------- ---------
Neither the Group nor the Company have a bank overdraft
facility.
17 Trade and Other Payables
Group Company
30 April 30 April 30 April 30 April
2023 2022 2023 2022
GBP GBP GBP GBP
Trade payables 286,249 1,798,291 4,449 9,146
Accruals and deferred income 286,425 174,088 246,776 134,438
Other taxation and social security 11,246 52,885 10,556 52,103
Other payables - - - -
583,920 2,025,264 261,781 195,687
-------- --------- -------- --------
18 Equity
Share Capital
30 April 30 April 30 April 30 April
2023 2022 2023 2022
Number Number GBP GBP
----------- ----------- --------- ---------
Ordinary Shares
Issued and fully paid of GBP0.01 each 960,415,644 960,415,644 9,604,156 9,604,156
Total 960,415,644 960,415,644 9,604,156 9,604,156
----------- ----------- --------- ---------
Authorised share capital is GBP10,084,364
(2022:GBP10,084,364).
Reconciliation of Ordinary Shares Number Par Value Share Premium Total
of Shares GBP GBP GBP
----------- --------- ------------- ----------
Opening balance 1 May 2022 960,415,644 9,604,156 11,877,466 21,481,622
Balance 30 April 2023 960,415,644 9,604,156 11,877,466 21,481,622
----------- --------- ------------- ----------
Other Reserve
On 17 May 2021, pursuant to a share for share exchange, OCT
unconditionally acquired the shares of OCTL , prior to the
admission of the Group onto the Official List and to trading on the
main market of the London Stock Exchange on 21 May 2021. Although
the transaction was not a reverse acquisition as defined in IFRS 3,
the Directors accounted for the transaction on a similar basis as
detailed in guidance issued by the IFRS Interpretation Committee.
The value of shares obtained in excess of the par value under the
share for share exchange agreement has been included as an other
reserve of GBP643,455 (2022: GBP643,455). This reserve is not
distributable.
19 Cash Flow Information
19(a) Cash used in operations
Group Company
30 April 30 April 30 April 30 April
2023 2022 2023 2022
Note GBP GBP GBP GBP
Loss after income tax from:
Continuing operations (5,945,050) (4,712,329) (5,933,678) (5,365,258)
----------- ----------- ----------- -----------
Loss after income tax (5,945,050) (4,712,329) (5,933,678) (5,365,258)
Adjustments for:
Research and Development
tax credit 9 (1,088,721) (791,058) (1,088,721) (759,726)
Release of Greek subsidiary
assets - 49,653 - -
Depreciation and amortisation 5 38,808 78,285 38,808 55,577
Loss on disposal of property,
plant and equipment - 32,183 - -
Share-based charge 24 63,850 291,598 63,850 291,598
Finance costs - net 6 (3,838) - - -
Decrease / (increase) in
trade receivables 1,334,220 (1,393,649) 4,835,224 7,943,045
(Decrease)/ Increase in
trade and other payables (1,441,343) 1,072,296 66,094 (42,244)
----------- ----------- ----------- -----------
Cash used in operations (7,042,074) (5,373,021) (2,018,423) 2,122,992
----------- ----------- ----------- -----------
19(b) Non-cash investing and financing activities
Non-cash investing and financing activities disclosed in other
notes are the options and shares issued to employees under the OCTL
Employee Option Plan and warrants issued to advisers (see note
26).
19(c) Net funding reconciliation
The analysis of net debt and the movements in net debt for each
of the periods presented is detailed below:
Group Company
30 April 30 April 30 April 30 April
2023 2022 2023 2022
Net funds GBP GBP GBP GBP
Cash and cash equivalents (note 16 ) 2,297,343 9,165,596 104,569 2,122,992
Borrowings - - - -
Lease liabilities - - - -
------------------------------------- --------- --------- -------- ---------
Net cash and cash equivalents 2,297,343 9,165,596 104,569 2,122,992
------------------------------------- --------- --------- -------- ---------
20 Financial Risk Management
This note explains the Group's exposure to financial risks and
how these risks could affect the Group's future financial
performance.
As a pre-revenue Group, the core financial risks that the Group
are exposed to are credit and liquidity risks. The Group's
financial risk management is predominantly controlled by the
finance team under policies approved by the Board of Directors.
Financial risks are identified, evaluated and managed in close
co--operation with the Executive Directors.
Liquidity risk
The Group has cash and cash equivalents GBP2,297,343 as at 30
April 2023. The Group does not operate a bank overdraft facility,
and was debt free at 30 April 2023.
The Group manages liquidity risk through rolling cash flow
forecasts and budgetary controls, ensuring sufficient cash is
available to meet obligations when due, predominantly those
relating to the research of the four drug programmes. Rolling cash
flow forecasts and liquidity performance indicators are monitored
by management and reported to and overseen by the Board of
directors on a quarterly basis, as part of the overall risk
management framework.
As detailed in note 2(d) and in the Directors' Report, the
current cash reserves are expected to be fully utilised by April
2024. The Board have considered various options that would allow
the Group to extend its cash a further three months beyond that in
the event that there was a delay in the next round of fundraising.
The Board has taken into consideration the level and timing of the
Group's working capital requirements (which takes into account
reductions in overhead costs and controls over discretionary
spending to preserve cash flow). Consideration has been given to
ongoing discussions around further third-party investment on a
short to medium term basis, and the extent to which these
discussions are advanced. The Board remains confident that it will
be able to raise funds to progress its strategy beyond the end of
April 2024. However, no such funding has been unconditionally
committed at the date of approval of these financial
statements.
As per the resolutions passed at the Group's last Annual General
Meeting, the Group is able to issue a further 5% of ordinary shares
without having to seek additional shareholder consent. As at the 30
April 2023, none of this headroom had been used.
Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. The Group has a policy of only dealing with creditworthy
counterparties, principally involving banks and their wholly-owned
subsidiaries with a credit rating in excess of B (as defined by at
least one credit rating agency) when placing cash on deposit. In
addition, at the year end there were no trade receivables in the
Statement of Financial Position. The other receivables relate to
R&D tax credit, VAT receivable from HMRC and related parties
(see note 25). The exposure to credit risk is therefore currently
limited to the carrying amount of cash and cash equivalents of
GBP2,297,343 (30 April 2022: GBP9,165,596).
Foreign currency exchange risk
All assets are held in Pound Sterling and the main foreign
currencies used to pay suppliers are Euro and US Dollar.
Consequently, foreign exchange risk is not considered to be
material to the Group. Whilst the loss on foreign currency
transactions rose in the period (albeit still immaterial), this was
partly due to the change in foreign currency payment facilities and
overall the foreign exchange risk is not considered to be material
to the Group.
Maturities of financial liabilities
The tables below analyse the Group's financial liabilities into
relevant maturity groupings based on their contractual maturities
for all non-derivative financial liabilities (the Group does not
hold any derivative financial instruments at the current or prior
financial period end).
The amounts disclosed in the table are the contractual
undiscounted cash flows. Balances due within 12 months equal their
carrying balances as the impact of the discounting is not
significant.
Total contractual
6 to cash flows
12 1 to 2 to and carrying
<6 months months 2 years 5 years amounts
Contractual maturities
at 30 April 2023 GBP GBP GBP GBP GBP
--------- ------- -------- -------- -----------------
Trade and other payables 583,920 - - - 583,920
Total non-derivatives 583,920 - - - 583,920
Total contractual
cash flows
6 to 12 1 to 2 2 to 5 and carrying
<6 months months years years amounts
Contractual maturities
at 30 April 2022 GBP GBP GBP GBP GBP
Trade and other payables 2,025,264 - - - 2,025,264
Total non-derivatives 2,025,264 - - - 2,025,264
------------------------- --------- ------- -------- -------- -----------------
21 Capital Management
The Group's objectives when managing capital are to: safeguard
its ability to continue as a going concern, and maintain an optimal
capital structure to reduce the cost of capital, in order that the
Group can continue to research and develop the four drug programmes
that could ultimately be commercialised and generate profits
available for distribution to the shareholders.
In order to achieve this, the Group may issue new shares and
sell assets. Consistent with others in the industry, the Group
monitors capital on the basis of the following gearing ratio:
Net debt as per note 19(c) divided by Total 'Equity' (as shown
in the Consolidated Statement of Financial Position).
30 April 30 April
2023 2022
GBP GBP
Debt - -
Cash 2,297,343 9,165,596
Net cash 2,297,343 9,165,596
Total equity 3,911,828 9,793,028
------------- --------- ---------
Gearing 58.7% 93.6%
------------- --------- ---------
The movement in gearing is as a result of the utilisation of
cash funds during the financial year . There remain no financial
covenants in place over the Group.
No dividends are proposed for the current financial period as
the Group remains pre-revenue (2022: GBPnil).
22 Events Occurring After the Reporting Period
On 17 May 2023, the Group announced that the MHRA and REC 2 had
approved its Phase I clinical trial application for OCT461201. On 8
June 2023, the Group announced the appointment of Dr Tim Corn as
Chief Medical Officer. On 17 July 2023, the Group announced its
expansion into oncology, having identified a potential
"first-in-class" immunotherapy agent for the treatment of solid
tumours. On 27 July 2023, the Group announced the successful
administration of the first-in-human dose of OCT461201, as part of
its Phase I clinical trial.
23 Related Party Transactions
The Group is headed by Oxford Cannabinoid Technologies Holdings
Plc, the ultimate parent entity. There is no ultimate controlling
party.
Key management personnel compensation
Detailed remuneration disclosures are provided in full in the
Directors' Remuneration Report. The Directors received dividends
paid by the Company of GBPnil (2022: GBPnil).
The amounts outstanding at the year end due to key management
was GBPnil (2022: GBPnil).
The following transactions occurred with other related
parties:
Transactions Transactions Balance Balance at
in year ended in period ended at 30 April 30 April
30 April 2023 30 April 2022 2023 2022
Purchase of management
services from related
party (a) - 35,000 - -
Amounts owed by a
related party (b) - - 35,994 35,994
Inter-company loan
(d) 3,529,014 9,532,376 1,917,293 5,446,307
Payments by OCTL
on behalf of OCT
(c) - 2,122,789 - -
Payments by OCT on
behalf of OCTL (c) - 2,071,983 - -
(a) Until 31 December 2021 a management service agreement was in
place between the Group and Kingsley Capital Partners LLP ('KCP'),
with the Executive Chair of the Group (Neil Mahapatra, until 11
February 2022) also being the Managing Partner of KCP.
(b) Between December 2021 and January 2022, the Group paid
GBP35,994 for professional services, which KCP agreed to reimburse
the Group for. This is included as a receivable in the Statement of
Financial Position at the year end.
(c) Due to a delay in the opening of a bank account for OCT,
until November 2021 all cash was held in the bank account of OCTL ,
who made payments on behalf of OCT during the period. That position
was reversed from December 2021. No payments were made on the
behalf of OCT by OCTL in the year ended 30 April 2023.
(d) A provision of GBP678,325 has been made in the period ended
30 April 2022 against the inter-company loan, with the provision
remaining as at 30 April 2023.
24 Share-Based Payments
Share-based payment reserve:
Group Company
30 April 30 April 30 April 30 April
Share Options 2023 2022 2023 2022
GBP GBP GBP GBP
As at 1 May 2022/ 1 June 2021 1,150,105 1,061,460 1,013,571 924,926
Share options: Old Scheme (OCTL) - - - -
Share options: New Scheme Issued
2022 (OCT) 51,696 88,645 51,696 88,645
---------------- -------------------- --------- ---------
As at 30 April 2023 / 30 April
2022 1,201,801 1,150,105 1,065,267 1,013,571
---------------- -------------------- --------- ---------
Group Company
30 April 30 April 30 April 30 April
Warrants 2023 2022 2023 2022
GBP GBP GBP GBP
As at 1 May 2022 / 1 June 2021 299,503 96,550 299,503 96,550
Warrants issued May 2021 12,154 202,953 12,154 202,953
-------- -------- -------- --------
As at 30 April 2023 /30 April
2022 311,657 299,503 311,657 299,503
-------- -------- -------- --------
Total share-based payment
reserve 1,513,458 1,449,608 1,376,924 1,313,074
----------- ---------- ---------- ----------
Employee Option Plan
The Group operates an equity-settled share-based remuneration
scheme for employees. The only vesting condition is that the
individual remains an employee of the Group over the vesting
period.
During the period, the Group recognised a share-based payment
expense of GBP51,696 (2022: GBP88,645) in relation to options.
Share Options Issued
OCTL issued 89,523 share options to four employees on 24
February 2020, that were exercisable at a price of GBP18.88 per
share under the original OCTL Option Scheme.
On 14 May 2021, the Board adopted the Group's Replacement Option
Scheme to facilitate the grant of replacement options in OCT by the
Company to option holders who held options over shares of OCTL
under the original OCTL Option Scheme. No new grants or options
will take place under the Replacement Option Scheme and all of the
options vested on 21 May 2021 when the Group listed. A total of
69,584,356 options were issued to three current and two previous
employees, with an expiry date of 10 years from the original grant
date. Two of the employees (both of whom are Directors ) given
replacement options are subject to a lock-in period of one year as
part of the IPO (expired 21 May 2022).
On 17 May 2021, the Board adopted the Group's New Employee Share
Option Scheme to incentivise certain of the Group's employees and
Directors . This new scheme provides for the grant of both
Enterprise Management Incentives (EMI) options and non-tax
advantaged options. Options granted under the new scheme are
subject to certain conditions, the key elements of which are as
follows:
-- The Remuneration Committee may grant options to any employee,
executive or Non-Executive Director of the Group;
-- No consideration will be payable for the grant of options;
-- The Remuneration Committee determines the exercise price of
options before they are granted, which shall be 30% above the
10-day volume-weighted average price ( VWAP ) of the Ordinary
Shares at the date of grant of the option; and
-- Options can normally only be exercised on satisfaction of the
exercise conditions determined by the Remuneration Committee at
grant, including any performance conditions which may be set.
On 21 May 2021, 86,437,408 options were granted to 5 employees
(4 of whom were Directors, 1 who switched to a Non-Executive
Director role on 11 February 2022) and 7,203,117 were granted to
three Non-Executive Directors under the new scheme. Each of the
options have an exercise price equal to 30% over the placing price,
being GBP0.065. They are exercisable from May 2022, on a
straight-line basis over a period of 3 years. There are no vesting
conditions.
During the year, 22,409,698 options were exercised, forfeited or
expired. Share options issued under the Replacement Option Scheme,
all of which were outstanding at the end of the year, have the
following expiry dates and exercise prices:
Exercise Share options
Grant date Expiry date price 30 April 2023
-------------------------- ------------ --------- --------------
24 February
14 May 2021 2030 GBP0.042 32,859,279
24 February
14 May 2021 2030 GBP0.05 22,412,951
Vested and exercisable at
30 April 2023 55,272,230
--------------------------------------------------- --------------
The assessed fair value at grant date of options converted or
granted during the year ended 30 April 2023 was GBP0.019 for
GBP0.05 replacement options, GBP0.0209 for GBP0.042 replacement
options, and GBP0.003 for the new options. The fair value at grant
date is independently determined using an adjusted form of the
Black-Scholes model which includes a Monte Carlo simulation model
that takes into account the exercise price, the term of the option,
the impact of dilution (where material), the share price at grant
date and expected price volatility of the underlying share
(informed by the volatilities of peer group companies), the
expected dividend yield and the risk-free interest rate for the
term of the option.
An expense of GBP51,696 for the New Employee Share Option Scheme
was recognised during the year ended 30 April 2023 (2022:
GBP88,645). Expenses for the Old Employee Share Option Scheme
recognised during the year were GBPnil (2022: GBPnil).
The inputs into the option pricing model, calculated using the
model described above, for the options issued under the new scheme
in May 2021 included:
Share price (trading price as at 28 May 2021 on LSE) GBP0.04
Exercise price GBP0.065
Expected volatility 32.28%
Expected life 3 years
Risk free interest rate 0.4638%
Warrants
On 21 May 2021, OCT issued a total of 33,307,275 warrants all
with an exercise price of GBP0.05 and a 5 year exercise period,
vesting on the day of issue. None of the warrants had been
exercised by 30 April 2023.
The Black-Scholes model is used to calculate the appropriate
charge for the warrants. The use of this model to calculate a
charge involves using a number of estimates and judgements to
establish the appropriate inputs to be entered into the model,
covering areas such as the use of an appropriate interest rate,
expected volatility, exercise restrictions and behavioural
considerations. A significant element of judgement is therefore
involved in the calculation of the charge. During the period, the
Group recognised total share- based payment expenses for warrants
of GBP12,154 (2022: GBP202,953).
The inputs into the warrants pricing model are as follows:
Share price (trading price as at 28 May 2021 on LSE) GBP0.04
Exercise price GBP0.05
Expected volatility 34.43%
Expected life 5 years
Risk free interest rate 0.5353%
Volatility was based on that of a company in the same sector as
the Group, experienced at a similar stage in the Group's
development, and is within the average banding for the Western
European pharmaceutical sector.
25 Loss Per Share
Year ended Period ended
30 April 30 April
2023 2022
GBP GBP
25(a) Basic loss per share
Basic loss per share attributable to the ordinary
equity holders of the Company (0.00619) (0.00491)
---------- ------------
25(b) Diluted loss per share
From continuing operations attributable to
the ordinary equity holders of the Company (0.00619) (0.00491)
---------- ------------
Total diluted loss per share attributable
to the ordinary equity holders of the Company (0.00619) (0.00491)
---------- ------------
Period ended
Year ended 30 April
30 April 2023 2022
GBP GBP
Basic loss per share
Loss attributable to the ordinary equity
holders of the Company used in calculating (5, 945,050
basic loss per share: ) (4,712,329)
-------------- ------------
Diluted loss per share
Loss from continuing operations attributable
to the ordinary equity holders of the
Company:
(5, 945,050
Used in calculating basic loss per share ) (4,712,329)
-------------- ------------
Used in calculating diluted loss per (5, 945,050
share ) (4,712,329)
Loss attributable to the ordinary equity
holders of the Company used in calculating (5, 945,050
diluted loss per share ) (4,712,329)
-------------- ------------
25(c) Weighted average number of shares used as the
denominator
2023 2022
Number Number
------------- -------------
Weighted average number of ordinary shares
used as the denominator in calculating basic
loss per share 960,415,644 960,415,644
Adjustments for calculation of diluted loss - -
per share:
Weighted average number of ordinary shares
and potential ordinary shares used as the
denominator in calculating diluted loss per
share 960,415,644 960,415,644
------------- -------------
The conditions relating to the issued share options and warrants
are such that they are anti-dilutive.
Directors and Professional Advisers
Directors
Cheryl Dhillon
Richard Hathaway
Neil Mahapatra
Bishrut Mukherjee
Julie Pomeroy
Paul Smalley (Appointed 17 October 2022)
Clarissa Sowemimo-Coker
Company Secretary
Robin Bennett (Appointed 12 January 2023)
Company number
13179529
Registered office
Prama House
267 Banbury Road
Oxford OX2 7HT
Auditor
Moore Kingston Smith LLP
6(th) Floor
9 Appold Street
London EC2A 2AP
Principal Bankers
Barclays Bank
1 Churchill Place
Canary Wharf
London, E14 5HP
Public Relations Advisers
Acuitas Communications ltd
33 Foley Street
London , W1W 7TL
Brokers
Axis Capital Markets Ltd
St Clements House
27 St Clements Lane
London EC4N 7AE
Financial Advisers
Cairn Financial Advisers LLP
9(th) Floor, 107 Cheapside
London EC2V 6DN
Overseas subsidiary operations
Details of all subsidiaries and their locations are detailed in
note 13. OCT Hellas Pharmaceuticals Research & Development
Laboratory S.A, a non-trading subsidiary in Greece was dissolved in
June 2021.
Directors
The following Directors have held office in the Company in the
period from 1 May 2022 to the signing of the financial
statements:
Julie Pomeroy Non-Executive Chair
Neil Mahapatra Non-Executive Director
Dr John Lucas Chief Executive Officer (Resigned 2 December
2022)
Clarissa Sowemimo-Coker CEO from 02 December 2022 (Chief Operating
Officer until 02 December 2022 and Company
Secretary until 12 January 2023)
Karen Lowe Finance Director (Resigned 17 October 2022)
Bishrut Mukherjee Non-Executive Director
Cheryl Dhillon Non-Executive Director
Richard Hathaway Non-Executive Director
Paul Smalley Finance Director (Appointed 17 October 2022)
The interests of the Directors (including family interests) in
the share capital of the Company are listed below .
Substantial shareholdings
As at 30 April 2023, the Company has been notified of, or is
aware of, the shareholders holding 3% or more of the issued share
capital of the Company, as detailed below:
Name of holder Number of shares Issued % of
share capital
Neil Mahapatra (Kingsley Capital
Partners LLP) 198,466,493 20.66%
Hargreaves Lansdown (Nominees)
Limited 134,276,472 13.98%
Imperial Brands Ventures Limited 104,376,988 10.87%
Aurora (Nominees) Limited 47,394,377 4.93%
Vidacos (Nominees) Limited 46,346,328 4.83%
Bank of New York (Nominees)
Limited 45,926,796 4.78%
Hsdl (Nominees) Limited 45,013,469 4.69%
Interactive Investor Services
(Nominees)
Limited 44,366,166 4.62%
Jim (Nominees) Limited 41,378,224 4.31%
Annual General Meeting
The Company's Annual General Meeting will be held at the offices
of Penningtons Manches Cooper LLP, 125 Wood Street, EC2V 7AW on 28
September 2023 at 11.00 am. The Notice convening the Annual General
Meeting (AGM) and an explanation of the business to be put to the
meeting is contained in the separate document which accompanies
this report.
Auditor
During the period, Moore Kingston Smith LLP was re-appointed as
the Group's auditor. The Board recommend that Moore Kingston Smith
LLP be reappointed as auditor at the AGM on 28 September 2023.
Directors' and officers' insurance
The Group maintains insurance cover for all Directors and
officers of Group companies against liabilities which may be
incurred by them while acting as Directors and officers.
Subsequent events
On 17 May 2023, the Group announced that the MHRA and REC 2 had
approved its Phase I clinical trial application for OCT461201. On 8
June 2023, the Group announced the appointment of Dr Tim Corn as
Chief Medical Officer. On 17 July 2023, the Group announced its
expansion into oncology, having identified a potential
"first-in-class" immunotherapy agent for the treatment of solid
tumours. On 27 July 2023, the Group announced the successful
administration of the first-in-human dose of OCT461201, as part of
its Phase I clinical trial.
Glossary of Annual Report Terms and Abbreviations
Annual General Meeting (AGM)
Aptuit (Verona) SRL, a subsidiary of Evotec SE (together
"Evotec")
Association for Assessment and Accreditation of Laboratory
Animal Care (AAALAC)
A private, non-profit organisation that promotes the humane
treatment of animals in science through voluntary accreditation and
assessment programmes.
Association of Chartered Certified Accountants (ACCA)
Charles Rivers Laboratories Edinburgh Ltd (Charles Rivers)
Chemotherapy-induced Peripheral Neuropathy (CIPN)
Neurological condition triggered by certain cancer treatments,
causing symptoms such as tingling, pain, and weakness in the hands
and feet due to chemotherapy's damaging effects on the peripheral
nerves, with debilitating effects on the patient.
Chief Executive Officer (CEO)
Chief Medical Officer (CMO)
Chief Operating Decision-Maker (CODM)
The individual or group responsible for strategic decisions that
affect the Company's operations and performance.
Chief Scientific Officer (CSO)
Companies Act 2006 (the Act)
Environmental, Social, and Governance (ESG)
Fair Value Through Other Comprehensive Income (FVOCI)
A classification of financial assets that are held with the
objective of collecting contractual cash flows and selling
financial assets.
Fair Value Through Profit or Loss (FVTPL)
A classification for financial assets that are held for trading
or are managed and whose performance is evaluated on a fair value
basis.
Financial Reporting Council (FRC)
Good x Practice (GxP)
A set of guidelines that industries must follow to produce
products that are safe and of high quality.
Quality guidelines and regulations applied in the pharmaceutical
industry. GxP is the abbreviation of "Good x Practice". The "x" in
GxP stands for the field the guidelines and regulations applied
to.
Some examples of GxPs include:
GMP - Good Manufacturing Process
GLP - Good Laboratory Practice
GDP - Good Distribution Practice
GCP - Good Clinical Practice
GxP are often referred to as current (cGxP).
IFRS Interpretations Committee (IFRIC)
A committee that interprets the application of International
Financial Reporting Standards (IFRS).
Initial Public Offering (IPO)
International Accounting Standards Board (IASB)
An independent group that sets accounting standards accepted as
a basis for financial reporting in many countries.
Irritable Bowel Syndrome (IBS)
A chronic gastrointestinal disorder characterised by recurring
abdominal pain, discomfort, and changes in bowel habits such as
diarrhoea, constipation, or a mix of both..
Long-Term Incentive Plan (LTIP)
A reward system designed to improve employees' long-term
performance by providing rewards that may not be tied to the
Company's share price.
Medicines and Healthcare Products Regulatory Agency (MHRA)
The UK government agency responsible for ensuring that medicines
and medical devices and other healthcare products are effective and
acceptably safe.
Moore Kingston Smith LLP (MKS)
The Company's Auditors
Net Book Value (NBV)
New Chemical Entity (NCE)
A drug molecule that has a unique chemical structure and has not
been previously approved or marketed as a pharmaceutical compound
or as an active ingredient in any investigational or approved drug
product.
Oxford Cannabinoid Technologies Holdings Plc (OCT)
Oxford Cannabinoid Technologies Limited (OCTL)
Phytocannabinoids (pCBs)
Chemical compounds that occur naturally in the cannabis plant.
The term 'natural' is often added to differentiate them from
synthetically produced cannabinoids.
Pressurised Metered Dose Inhaler (pMDI)
A device that delivers a specific amount of medication to the
lungs, in the form of a short burst of aerosolised medicine.
Research and Development (R&D)
Involves the process of discovering, designing, testing and
developing new drugs and medical treatments.
Scientific Advisory Board (SAB)
A group of experts, usually external to an organisation or
institution, who provide guidance, recommendations, and expertise
on scientific, technical, or research-related matters.
Task Force on Climate-related Financial Disclosures (TCFD)
A market-driven initiative, set up to develop a set of
recommendations for voluntary and consistent climate-related
financial risk disclosures in mainstream filings.
Tetrahydrocannabinol (THC)
The main psychoactive compound in cannabis that produces the
'high' or euphoric effects. It interacts with the brain's
cannabinoid receptors (e.g., CB1) to produce various physiological
and psychological effects
Tier 1 Drug R&D CROs
Top-level contract research organisations that provide support
to the pharmaceutical, biotechnology, and medical device industries
in the form of research services.
Trigeminal Neuralgia (TN)
Trigeminal neuralgia is a severe chronic neurological disorder
characterised by sudden, intense pain, often triggered by even mild
stimuli such as touching, talking, or chewing. Triggered by damage
to the trigeminal nerve, the pain is localised in the head and in
the face..
United States Food and Drug Administration (FDA)
The federal agency of the United States Department of Health and
Human Services responsible for protecting and promoting public
health through the control and supervision of food safety,
prescription and over-the-counter medications, vaccines, and other
biological products.
Wales Research Ethics Committee 2 (REC 2)
An independent research committee that reviews new or revised
study protocols and gives an opinion on ethical aspects and
acceptability of the proposed activity. The committees can be based
in different parts of the UK, including Wales
[1] Richard was unable to attend the July Board meeting due to a
pre-existing commitment. The July Board meeting comprised a
sign-off on the Annual Report and updates from the CEO and CFO.
Richard received the Annual Report in advance of the meeting and
was able to review and provide feedback on the Annual Report to the
Chair before the meeting. The Company Secretary updated Richard
following the meeting.
[2] Bishrut was unable to attend the August Board meeting due to
a conflicting work commitment. Bishrut received the Board papers in
advance of the meeting and was able to feed back his views to the
Chair before the meeting. Bishrut could not attend the April Board
meeting at short notice due to unexpected personal reasons. The
Company Secretary updated Bishrut following the meeting.
[3] The figure of GBP0 for the annual bonuses of our executive
directors in 2023 requires further explanation. Despite the team's
exceptional operational performance and their meeting of key
strategic objectives, which would typically qualify them for a
bonus, the Remuneration Committee made the difficult decision not
to issue bonuses this year. This decision was influenced by several
factors, including the current share price of the Company, wider
market conditions, and the Company's cash runway.
[4] Cheryl was unable to attend the January Audit Committee
meeting due to conflicting work commitments. The January meeting
was to review the 2023 interim results. Cheryl received the
Committee papers in advance of the meeting and was able to feed
back her views to the Chair before the meeting.
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END
FR BIGDISGXDGXG
(END) Dow Jones Newswires
August 31, 2023 02:00 ET (06:00 GMT)
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