GW Pharmaceuticals’ share price dropped on the London Stock Exchange this morning, despite the firm revealing it would receive a £1 million milestone payment from Sativex partner Bayer Healthcare ahead of original expectations.
The news follows the approval of Sativex (tetrahydrocannabinol plus cannabidiol), a cannabis-derived drug for the treatment of multiple sclerosis-related pain, in Canada last month [[20/04/05d]]. Under the terms of the original agreement – established in May 2003 – approval in the UK was envisaged before that of Canada. However, in the UK, the country’s regulator requested that an additional efficacy trial of Sativex be conducted – pushing its approval back [[06/12/04e]]. GW said at the time it would begin a confirmatory trial but would also appeal the MHRA’s decision, with a hearing due in June.
Bayer made an undisclosed milestone payment to GW on receiving the thumbs up from Canadian authorities, and the German firm has now agreed to make an immediate additional payment to GW of £1 million. With respect the UK, GW will now receive £10 million in cash rather than Bayer being able to elect to buy the company’s shares. The total milestone payments due to GW under the Bayer agreement of £32.75 million remain unchanged.
Geoffrey Guy, Executive Chairman of GW, said: “We believe that these amendments are a positive development for GW shareholders. While the total value of our potential receipts under the marketing agreement remains unchanged, we have increased our short-term cash position by £1 million, whilst at the same time ensuring that the substantial UK approval payment will not be dilutive to our shareholders.”