Oxygen Biotherapeutics’ (NASDAQ:OXBT) recent securities offering brought the company net proceeds of $1.9 million but President and CFO Michael Jebsen is blunt about the limits of that funding.

It’s just enough for OxyBio to open clinical trial sites in Switzerland and Israel and begin enrolling the second group of patients in phase IIb clinical trials of its lead drug candidate Oxycyte, an experimental traumatic brain injury treatment. Beyond that, other financial steps must be taken. 

“We know that this raise is not sufficient to sustain operations long term, however we felt that this was the right amount for the company at this critical time,” Jebsen said during a conference call to discuss fiscal third quarter results.

Time is of the essence for Morrisville-based OxyBio. Enrollment in that trial is expected to resume during the company’s fiscal fourth quarter. According to the company’s quarterly report, OxyBio’s cash reserves at the end of January combined with the capital from the recent securities offering provide only enough funding to last through July.

OxyBio needs financial flexibility to keep its clinical programs going and the company is letting shareholders know just how far it may have to stretch. At a special meeting for shareholders scheduled for April 26, shareholders will be asked for their authorization allowing the company to issue more shares in excess of Nasdaq limits. They’ll also be asked for their authorization for the company to enact a reverse stock split.

The capital raise last month came from issuing preferred stock and warrants. Jebsen said that if OxyBio does not get shareholder approval to issue more stock, the warrants the company issued likely cannot be exercised and the company won’t receive the proceeds. The option of a reverse stock split must remain on the table because it’s the most effective way to raise the company’s stock price and maintain the Nasdaq listing. The Nasdaq requires a $1 minimum price in order to trade on the exchange. OxyBio stock has been trading at around 26 cents a share, at the opposite end of the stock’s 52-week high of $3.20 per share.

OxyBio has taken steps to trim its spending. Last month the company reached a deal with a Swiss company that will take over manufacturing distribution of its skin product Dermacyte. That leaves OxyBio free to direct its resources toward Oxycte.

The Oxycyte clinical trial sites were initially expected to open by the end of the fiscal third quarter before they encountered delays. Jebsen now says he expects them to open in the “next few weeks.”

OxyBio’s longer term plan for Oxycte is to find a partner that can help in the development of the compound, which works by improving the delivery of healing oxygen to damaged tissue. A large pharmaceutical partner could also finance the much larger and expensive phase III studies the company will need before it can apply for Food and Drug Administration approval.

The best way to land that partnership is to generate clinical data that will demonstrate to a potential partner the value of entering such a deal. Failing that, the company can go it alone in pursuing further clinical development of Oxycte. Either way, OxyBio will need good clinical data to show partners or investors the value and potential of the compound.