http://www.uk-invest.com/news/issues.html
June 14, 2001
Supporters of legalising cannabis
have long argued that the herb harbours medical benefits, including aids
for sufferers of cancer and glaucoma. Now a number of companies are planning
ways to make money while the grass grows.
One of these, GW Pharmaceutical,
is developing a range of medicines that use cannabinoids, the active ingredient
of cannabis, as their base. The company hopes that doctors will be able
to prescribe these drugs as treatments for multiple sclerosis, cancer pain
and rheumatoid arthritis.
The company is now seeking a listing
on AIM and hopes to raise £16m before costs. The offer will value
the company at between £140m and £170m, with trading expected
to start on June 28.
The money will go to fund Phase III
clinical trials, the final step in the medicines approvals process. GW
will also use the money to set up production facilities. The multiple sclerosis
drugs look set to be first to go on sale. GW expects to apply for approval
to the government's Medicines Control Agency in 2003, with first sales
expected in 2004.
Age-old treatment
Cannabis has been used as a therapeutic
drug -- legally and illegally -- for hundreds of years. According to GW's
directors, this should work to the company's advantage. "The long history
of medicinal use of cannabis means that the development of cannabis-based
medicines holds a greater certainty of success than many other biopharmaceutical
programmes," they say.
The UK government has said it will
not object to cannabis-based medicines, as long as they gain approval in
the usual way. The US authorities take a similar view.
Clearly, this stops a long way short
of prescribing cannabis itself. Instead, GW will be making its treatments
from a standardised extract from specially-bred cannabis plants. The drugs
will be available as tablets, sprays and an inhaler. There are many precedents
for making legal drugs from an otherwise illegal substance: opiates, as
one example, are widely used as the basis for painkillers.
The company will have a large market
for its drugs if trials are successful: the number of MS sufferers alone
is put at 2.5 million (according to GW). GW plans to expand into other
sectors, such as treatments for migraine, schizophrenia and epilepsy.
Cultivating a market
The development process does contain
risks for GW, however. As well as the usual uncertainties that surround
any clinical trial programme, there is the issue of social acceptability
for cannabis-derived treatments.
Then there is the issue of supply.
To meet demand, GW will have to ensure that enough of the right varieties
of cannabis plants are cultivated, and at the right quality. Needless to
say, the cultivation, processing and supply of the drug raise security
issues. But if the company can produce drugs which avoid the side effects
of many current treatments, it should have the basis for a successful business.
Pricing for shares in GW Pharmaceuticals
will be set on June 21. Collins Stewart is handling the placing, which
is being aimed at institutional investors.
Stephen Pritchard is UK-iNvest.com's
broadcast editor.
By Stephen Pritchard, UK-iNvest.com