GW leaps penultimate hurdle in Sativex MS spasticity approval

GW Pharmaceuticals reached an important milestone today with the passage of a regulatory deadline on its cannabinoid pain medication Sativex. UK and Spanish regulators have raised no major issues about its safety or efficacy at the key 150-day mark, deeming it approvable for upper-limb spasticity in MS patients.

GW shares jumped 13% on the news by mid-afternoon to 114p, with the rising prospects that Europe-wide approval of the oral spray is nearing. Investors are also hopeful that the £12.5m ($19.1m) in milestone payments due from GW’s partners Bayer and Laboratorios Almirall will help jump start its pipeline, where Sativex is in trials for cancer pain and other cannabinoid candidates in early-stage tests for central nervous system, autoimmune and metabolic disorders (Event – GW will expand on Sativex approval, January 27, 2010).

Analysts covering the firm saw the announcement as a clear positive, with Piper Jaffray valuing the European opportunity alone at 109-119p per share, while KBC Peel Hunt raised its target price to 145p from 120p.

Remaining issues

On a conference call today, GW executives said they expect UK approval to come in the second quarter of 2010 after completing negotiations over the wording of the patient information leaflet, with a launch coming immediately thereafter. The Spanish launch will come about three months after the UK, as the company must also negotiate the price and reimbursement with the government.

Under the mutual recognition process GW can then roll Sativex out to the other 25 European Union countries based on the UK and Spanish approvals. GW executives said they expect those approvals to take place in the first quarter of 2011.

Bayer holds the rights to sell Sativex in the UK and Canada, where it is already approved for cancer and neuropathic pain and has been filed for MS spasticity, while Almirall holds the rights for the rest of Europe. Otsuka Pharmaceutical has rights in the all-important US market.

EvaluatePharma'sconsensus forecasts put sales of Sativex at $39m in 2014 for Almirall, with $21m in royalties accruing to GW. That gives Sativex a $44m net present value for GW and $57m for Almirall. Figures are not available for Bayer or Otsuka, but it is not likely to be one of the bigger sellers for either firm.

Bayer’s share of regulatory approval milestones is £10m ($15.3m) and Almirall’s is £2.5m ($3.82m).

Long road almost at end

It has been a long process to bring Sativex to the market. British regulators first rejected the marijuana plant extract in 2004 on efficacy grounds and then in 2008 a phase III trial in neuropathic pain failed, both because of an unexpectedly pronounced placebo effect (GW Pharmaceuticals feels the pain of placebo effect, April 8, 2008).

But approval, even if it took much longer than originally expected, gives GW a potentially transformational revenue stream that can help fund trials for additional indications for Sativex or to bring other candidates in its pipeline forward.

Pipeline hopes

Whilst European approval is nearing for MS spasticity, the company is also awaiting news on a phase IIb/III cancer pain trial in the second quarter of 2010, a study funded by Otsuka, which is hoped will be a stepping stone toward US and EU filings in 2012. Two additional phase III studies are planned.

Two neuropathic pain indications, one in MS, are also being trialled. Two phase III trials for peripheral neuropathic pain are planned following first EU approval for MS spasticity.

Earlier in the pipeline are phase I trials testing tetrahydrocannabivarin for obesity and type II diabetes and cannabidiol for liver disorders and hyperlipidaemia, while pre-clinical projects for neurological indications, psychoses and diabetes also await new funding.

The only success that appears to be assured, of course, is Sativex in MS spasticity. Without that regulatory approval, the fate of the rest of the pipeline would surely have been thrown into doubt. As such, GW executives and investors can feel that they will get more shots on goal with cannabinoid products.

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