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GW enters key period

Despite GW Pharmaceuticals, developer of cannabinoid medicines, reporting a net loss for its year to September 30 2007, the company's future looks positive, buoyed by a significant licence agreement with Otsuka for Sativex and "highly promising" results in several early trials.

Despite GW Pharmaceuticals, developer of cannabinoid medicines, reporting a net loss for its year to September 30 2007, the company's future looks positive, buoyed by a significant licence agreement with Otsuka for Sativex and "highly promising" results in several early trials.

The firm's turnover in 2007 was £5.7m, up from £2m in 2006, bolstered by Canadian sales of Sativex for the treatment of multiple sclerosis (MS) pain. The drug was also approved during the year (in Canada) for the relief of cancer pain. A large-scale trial of Sativex for this indication was initiated in the US, with results due at the end of this year. Overall, the company made a loss in 2007 of £10.9m, however this was deemed to be in line with expectations.

A key licensing agreement with Japan's Otsuka Pharmaceuticals for the US market provides long-term commercial supply price and royalty security for Sativex, including an $18m signature fee and $255m in milestone payments. Chairman Geoffrey Guy said that the formation of the strategic alliance "marked 2007 as a transformational year for GW. The US licence agreement has secured the future of Sativex in the world's largest pharmaceutical market".

The deal also comprises global collaboration in cannabinoid research, with particular focus on develop treatments in CNS and oncology. 

Key trial results due
Depending on the results from three pivotal clinical trials, to be announced in 2008, analysts consider GW to be a potentially solid investment. The large US trial (Sativex for treating cancer pain) is expected to report at the end of the year, while positive data around the same time from an additional phase III trial (for MS spasticity) could support the re-application of regulatory approval for this indication in Europe. The firm also anticipates announcing findings by April 2008 from a European phase III trial (MS neuropathic pain).

Plans are also afoot to take a new potential cannabinoid treatment for diabetes and related metabolic disorders into phase II during the year. On January 22, the company reported "highly promising" results in both preclinical and phase I trials.

If all of the planned trials yield positive data, the company could well be in a strong position in 2009 to drive growth by taking Sativex into European markets such as the UK for major indications. The share price has picked up recently, though some analysts believed it could improve markedly by the end of the year, depending on the trial results.

23rd January 2008

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