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Summary
- GW Pharmaceuticals has announced that Ireland’s Jazz Pharmaceuticals will be buying it out for £3 billion in a cash and stock deal.
- The deal is likely to close by the second quarter of this year.
- GW’s drug Epidiolex had posted annual sales of $510 million within two years of its launch.
UK-based cannabis medicine maker GW Pharmaceuticals announced that Ireland-based Jazz Pharmaceuticals would acquire it for £5.3 billion (USD 7.2 billion) in a cash and stock deal.
GW Pharmaceuticals is set to receive US $220 per share, of which Jazz Pharmaceuticals will pay US $200 in cash and the rest in shares. The transaction valued the cannabis company at a 50 per cent premium based on its closing share price as on 2 February.
Dr Geoffrey Guy, the founder of GW Pharmaceuticals, is expected to receive £65.9 million. Simultaneously, the company’s CEO Justin Gover will net £28.6 million based on their company shareholding. The deal is expected to close in the second quarter of 2021.
Dr Guy founded GW Pharmaceuticals in 1998 intending to develop plant-derived cannabinoid therapeutics. It was the first cannabis-based medicine to receive approvals from any country.
Cannabis medicine maker’s drug Sativex had received approval in the United Kingdom for treating multiple sclerosis (MS) patients. Furthermore, the company’s second drug Epidiolex, which aids in dealing with epileptic seizures, received approvals in the US. Europe granted its permissions to GW for both Sativex and Epidiolex in 2019.
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The cannabis-related companies have witnessed a spike in investment activity in recent years owing to the legalisation of marijuana in several countries for pain management, anxiety, epilepsy, and other medical conditions.
Epidiolex posted annual sales of US $510 million within two years of launch. Analysts expect sales to cross US $1 billion soon.
Moreover, experts predicted the acquisition indicates the growing normalisation of marijuana and the pharmaceutical industry’s rising interest in the drug and its medicinal derivatives. The deal is expected to drive global private equity and institutional investor sentiment in the cannabinoid-based medicines sector.
The deal highlighted that well researched and developed medical cannabinoids have significant potential to address patients' unmet healthcare requirements.
The shares of GW Pharmaceuticals PLC ADR (NASDAQ: GWPH) soared by 47 per cent in pre-market trading on Wednesday, 3 February, while stock price of Jazz Pharmaceuticals PLC (NASDAQ:JAZZ) declined by almost 5 per cent on the same day. The news further led to a rise in the broad-based cannabis-related stocks.
Notably, global cannabis sales are expected to witness a sharp growth of approximately 35 per cent in 2020 to reach a value of USD 20 billion for the year. Sales in the previous year stood at USD 15 billion. The news adds to the growing hope towards ending federal prohibition in the US after a few Democratic Senators pledged to make cannabis reform legislation a priority in Congress.
