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Sativex alliance between GW and Otsuka in the US

UK-based GW Pharmaceuticals and privately owned Japanese pharmaceutical company, Otsuka, have entered into a major long term strategic cannabinoid alliance in the US for Sativex

UK-based GW Pharmaceuticals and privately owned Japanese pharmaceutical company, Otsuka, have entered into a major long term strategic cannabinoid alliance in theUS for the former's lead product, Sativex, for cancer pain and CNS treatments.

The collaboration commenced with the signing of an exclusive license and development agreement with Otsuka developing and market Sativex in the US, while GW will be responsible for the manufacture and supply of Sativex to Otsuka. The agreement is subject to Hart Scott Rodino clearance in the US.

The financial terms of this agreement include total milestone payments to GW of up to USD 273 million, as well as a long term commercial supply price and royalty. Otsuka will pay GW a signature fee of USD 18 million. Otsuka will also bear the costs of all US development activities for Sativex in the treatment of cancer pain, additional indications, and future formulations.

GW and Otsuka will jointly oversee all US clinical development and regulatory activities. For the first cancer pain indication, GW will be responsible for carrying out such activities, at Otsuka's cost. GW will also continue to be the holder of the IND until the filing of a New Drug Application, which will be in Otsuka's name. Otsuka will assume development and regulatory responsibility for the second and any subsequent indications.

CNS and cancer treatment opportunities...
Both companies are also discussing the possibility of entering into a cannabinoid research collaboration for CNS disorders and cancer treatment in order to research, develop and commercialise a range of other early stage cannabinoid product opportunities.

Otsuka's main therapeutic focus is on CNS treatments, as its main product is schizophrenia treatment, Abilify (aripiprazole), which it co-markets in the US with Bristol-Myers Squibb and ranks among the top seven product launches ever. Otsuka's experience and success in t, thus makes it an ideal partner in the US for GW. Otsuka is continuing to expand its CNS specialty sales force presence in the US.

Sativex was approved in Canada under a license with conditions for prescription use in April 2005. In December 2005, GW and the Spanish pharmaceutical company, Almirall, announced an exclusive agreement for Almirall to market Sativex in Europe. In the UK and Canada, Bayer has been appointed as exclusive distributor. Regulatory approval has not yet been granted in EU territories, however.

In early 2006, Sativex received permission from the FDA to enter directly into phase III trials in the US. In late 2006, GW began its first phase III trial in the US for cancer patients. GW and Otsuka currently plan for the first US pivotal efficacy clinical trial to be a phase II/III cancer pain dose ranging study, to commence this year.

Dr Russell K Portenoy, chairman of the Department of Pain Medicine and Palliative Care at Beth Israel Medical Center in New York City and principal investigator of the US Sativex study said of the alliance: "A previous phase III clinical study showed that Sativex achieved a statistically significant improvement in pain relief in terminally ill cancer patients. There are 3.9 million cancer patients in the US, of which 2.5 million suffer pain. Although opioids are highly effective analgesics, studies suggest that as many as one-third of patients with pain due to advanced cancer do not obtain adequate relief and new treatments are needed. Cannabinoid formulations may represent an important option in the future and the information obtained from clinical trials of Sativex will be critical in defining their role."

Dr Geoffrey Guy, GW's chairman, added: "The agreement represents a landmark event in the history of GW. Not only have we secured the development and marketing of our lead product, Sativex, in the world's largest market, we have also selected a strategic partner that will allow us to extend our cannabinoid pipeline. We are delighted to be working with Otsuka to fulfill our ambition of developing a range of novel cannabinoid medicines to meet serious unmet medical needs."

Professor Taro Iwamoto, president and COO of Otsuka Pharmaceutical Development & Commercialisation stated: "Otsuka is committed to maximising the potential of Sativex in the US market and looks forward to exploring a range of longer term cannabinoid product opportunities. We are confident that this is the beginning of a highly productive and valuable relationship for both companies."

Financial highlights...
For FY06, financial highlights at GW included net cash inflow of GBP 6.8 million, with cash and short-term deposits of GBP 19.9 million, ahead of guidance. Revenues of GBP 2.0 million included GBP 1.4 million relating to commercial sales of Sativex. GW recorded a net loss of GBP 11.9 million, which was in line with expectations.

According to a Visiongain report, if Sativex achieves marketed status in the US , profits of USD 575 million (GBP 292.9 million/ EUR 438.2 million) could be realised by 2010. With these revenues, Sativex will dominate the existing partly cannabinoid-derived nausea products Marinol (dronabinol) and Cesamet (nabilone), which are manufactured by Unimed and Cambridge Laboratories, respectively.

20th February 2007

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