UK medicinal cannabis company aims to raise $180m

A British company that makes medicines from cannabis is aiming to raise almost $180m on Nasdaq to push forward a new treatment for childhood epilepsy.

The share issue would bring the total raised by GW Pharmaceuticals in New York over the past two years to nearly $450m. During that time, its market capitalisation in London, where it has a dual listing, has grown from less than £100m to almost £1.5bn.

GW has special permission from the UK Home Office to grow cannabis at an undisclosed location in England for use in drugs that harness the therapeutic benefits of marijuana without producing the "high" associated with smoking the plant.

The company's Sativex treatment for multiple sclerosis has already been approved in 24 countries but investor enthusiasm is focused on the potential of its Epidiolex medicine to tackle hard-to-treat forms of childhood epilepsy.

Of the 500,000 children with epilepsy in the US about a third do not respond well to existing drugs. Initial results from an early-access programme involving hundreds of US children suggests Epidiolex could reduce seizures by more than 50 per cent.

If these findings are replicated in clinical trials due to report by the end of this year, GW would be on course to file for regulatory approval next year and launch in 2017, according to Justin Gover, chief executive.

He said the latest Nasdaq fundraising would be used to build the company's manufacturing and commercial infrastructure in a sign of its commitment to reach market on its own rather than selling to a bigger company or seeking a partnership.

"Instead of just being a pipeline filler for other companies we want to own our own products and have the ability to commercialise them," he told the Financial Times.

Paul Matteis, analyst at Leerink, said Epidiolex had a two-thirds chance of success and recounted a recent meeting with epilepsy specialists who said there was "huge unmet need" for new childhood treatments and "excitement" about GW's drug.

Mr Gover said research, development and manufacturing would remain in the UK, where the company employs about 300 people, even though the commercial focus was on the US. "We are a British company and the investment and expertise we've built up is concentrated here."

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GW has benefited from a broader surge in US biotech valuations over the past two years amid renewed investor appetite for the high-risk sector.

The company said on Wednesday it would issue 1.6m American Depositary Shares at a price of $112 each, raising $172.9m. The offer was expected to close on May 5, with Morgan Stanley, Bank of America Merrill Lynch and Cowen & Co acting as joint bookrunners. Piper Jaffray is lead manager.

The US shares were down from recent all-time highs at $111.57 on Wednesday, but up almost 12-fold from their $8.90 IPO pricing in 2013.

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