Britain's marijuana-based drug developer GW Pharmaceuticals explores sale

Britain's GW Pharmaceuticals Plc has hired an investment bank after other drugmakers showed interest in acquiring the marijuana-based drug developer, Reuters yesterday reported, citing people familiar with the matter.

GW PharmaceuticalsThe identity of the potential suitors could not be established, the report said.

The Cambridge-based company is becoming a prime target for larger pharmaceutical companies because of its key epilepsy treatment drug called Epidolex, which uses cannabis-based compounds.

Epidiolex passed its first pivotal phase 2 trials for the rare forms of childhood epilepsy known as Lennox-Gastaut syndrome (LGS) and Dravet syndrome, which significantly reduces seizure frequency in two groups of patients unresponsive to existing antiepileptics.

Epidiolex, which has received orphan drug designation from the US Food and Drug Administration (FDA) for Dravet syndrome, is currently ongoing phase 3 trials

According to other media reports, GW Pharmaceuticals is preparing to submit Epidiolex to the FDA for approval during the first half of next year.

But the FDA may find it difficult to approve the drug since large-scale research on cannabinoids is unavailable in the US due to restrictions on the availability of marijuana for research use since it has been classified as a Schedule I drug, a classification reserved for substances that have no proven medical use and are highly addictive.

However, the FDA has already approved three cannabis-based drugs to treat nausea and promote weight gain for cancer and AIDS patients.

Last month, the US government promised to expand the number of suppliers with government-approved marijuana to researchers and drugmakers.

If approved, Epidolex could treat around 20,000 patients in the US alone and has the potential to generate global annual sales of around $800 million a year, according to analysts.

GW Pharmaceuticals, which currently has a market cap of around $2.3 billion, is banking on the US approval of Epidolex since Its first drug, Sativex, for treatment of multiple sclerosis spasticity, rakes in just $2 million a year, partly because the FDA has not approved it.

Sativex, which was approved in the UK in 2010 and sold in 27 countries, is a mouth spray botanical drug made out of cannabis extract, and is used in the treatment for multiple sclerosis to alleviate neuropathic pain, spasticity, overactive bladder, and other symptoms.

Novartis, Otsuka, Bayer, Ipsen, NeoPharm and Almirallm, which are GW's current partners, could be interested in buying the company, the report added.