GW PHARMA'S HOPES COULD STILL GO UP IN SMOKE
While multiple sclerosis sufferers have long argued that smoking cannabis relieves their muscle problems and chronic pain, it has taken GW Pharmaceuticals to develop the world's first medicine based on cannabis and available on prescription for MS patients.
The drug is Sativex, an under-the-tongue spray, and it was launched yesterday as a pain medicine for MS in Canada. This is a monumental achievement for a UK drug company and it speaks highly of the company's scientific nous and the chutzpah of its founder, Geoffrey Guy.
But it is not a reason to invest in GW's shares. It is having a much harder time getting Sativex approved in the UK, where the regulator has been more sceptical of its claims to relieve spacticity. Go back and do more work, GW was told.
That work is costly. Losses were pared to UKP 5.1m in the first six months of the year, but the company is still burning through more than UKP 1m a month and knows that regulators are demanding bigger and more statistically significant trials if Sativex is to get on the market in Europe. Although there will be some money coming in from Canadian sales, the company's UKP 16.2m cash pile will be whittled away by the end of next year.
Encumbered with a history of over-optimism, the company knows it will not be able to raise cash from shareholders at the current price. So it is hoping instead to sell marketing rights to Sativex in continental Europe as it has done in the UK and Canada. Unless Canadian sales turn out to be spectacular (unlikely in a country which already allows MS sufferers to smoke cannabis), these deals might not bring in enough. Avoid.