Oxygen Biotherapeutics (Nasdaq: OXBT) is cutting its debt load to $300,000 from $4.9 million through a stock deal.

The Morrisville-based life science firm says an unnamed investment fund has acquired 2.36 million shares of stock at a price of $1.95 and has an option to buy the same number in the future at a price of $2.60.

“This debt conversation transaction was concluded with an investment fund managed by one of our company’s directors,” said OxyBio’s interim CEO Michael Jebsen. .”We are pleased to have the strong support of our directors and long-term shareholders. This transaction further improves our operating capital position by reducing interest payments and eliminating a significant short-term liability, while also enhancing our net equity position.”

OxyBio shares traded at $1.40 Wednesday morning. 

The company recently was issued a patent protecting applications of its technology in treating pruritis, or skin itching.

OxyBio has developed technology that promotes the delivery of oxygen to damaged tissue. The company completed a clinical study in May 2012 in which its technology showed efficacy in relieving pruritis induced by histamines. The randomized, double-blind, placebo-controlled study in 30 healthy male and female volunteers aged showed that “a profound drop in itch sensation” when the company’s topical treatment was applied.