Wednesday, February 14, 2007

GW and Otsuka Announce Major Long Term Strategic Cannabinoid Alliance





14/02/2007

London, UK; Princeton, NJ, USA; Tokyo, Japan; 14 February 2007: GW Pharmaceuticals plc (AIM: GWP) and Otsuka Pharmaceutical Co., Ltd. today announce that they have entered into a major long term strategic cannabinoid alliance.

The relationship has commenced with the signing of an exclusive license and development agreement to develop and market Sativex®, GW's lead product, in the United States. The companies are also in detailed discussions with a view to entering into a cannabinoid research collaboration in the field of Central Nervous System (CNS) disorders and cancer treatment in order to research, develop and commercialize a range of other early stage cannabinoid product opportunities.

The Otsuka Pharmaceutical Group has placed significant emphasis on the research of CNS disorders for the past 27 years. Otsuka's lead product in the field of CNS ranks among the top seven product launches in industry history and the No. 1 product launch since 2002. Worldwide revenues from this product increased from $1.3bn in 2005 to over $1.9bn in 2006.

The Group is privately owned, comprises 87 companies and employs approximately 27,000 people in 17 countries and regions worldwide. It earned revenues of $6.8 billion in fiscal 2005, ranking it the 26th largest pharmaceutical company in the world1. Otsuka is continuing to expand its CNS specialty sales force presence in the US.

Sativex US License

Under the terms of the license agreement, GW has granted Otsuka an exclusive license to develop and market Sativex, GW’s lead product, in the US. GW will be responsible for the manufacture and supply of Sativex to Otsuka. The agreement is subject to Hart Scott Rodino clearance in the US.

The financial terms of this agreement include total milestone payments to GW of up to $273m as well as a long term commercial supply price and royalty. Otsuka will pay GW a signature fee of $18m. In addition, Otsuka will bear the costs of all US development activities for Sativex in the treatment of cancer pain, additional indications, and future formulations.
GW and Otsuka will jointly oversee all US clinical development and regulatory activities. For the first cancer pain indication, GW will be responsible for carrying out such activities, at Otsuka’s cost. GW will also continue to be the holder of the IND until the filing of a New Drug Application, which will be in Otsuka’s name. Otsuka will assume development and regulatory responsibility for the second and any subsequent indications.

In 2006, the Food & Drug Administration (FDA) permitted Sativex to enter directly into late stage development in the US for the treatment of pain in patients with advanced cancer that has not been adequately relieved by opioid medications. GW and Otsuka currently plan for the first US pivotal efficacy clinical trial to be a Phase II/III cancer pain dose ranging study, to commence this year.

Commenting on Sativex, Dr. Russell K. Portenoy, Chairman of the Department of Pain Medicine and Palliative Care at Beth Israel Medical Center in New York City, and principal investigator of the first planned US Sativex study said, "A previous Phase III clinical study showed that Sativex achieved a statistically significant improvement in pain relief in terminally ill cancer patients. There are 3.9 million cancer patients in the US, of which 2.5 million suffer pain. Although opioids are highly effective analgesics, studies suggest that as many as one-third of patients with pain due to advanced cancer do not obtain adequate relief and new treatments are needed. Cannabinoid formulations may represent an important option in the future and the information obtained from clinical trials of Sativex will be critical in defining their role."

Cannabinoid Research Collaboration

Under the proposed cannabinoid research collaboration, which is currently under detailed discussion and is expected to be formalized in a separate agreement later in the year, Otsuka would fund the evaluation of a range of cannabinoids as drug candidates within the field of CNS and cancer treatment, with a view to selecting the most promising candidates for full clinical development, regulatory approval and global commercialization. Products selected for commercialization would be the subject of a license from GW. Under the terms of this license, Otsuka would fund the global development of selected products and GW would receive commercially reasonable financial terms.

Dr Geoffrey Guy, GW's Chairman, said, "This agreement represents a landmark event in the history of GW. Not only have we secured the development and marketing of our lead product, Sativex, in the world’s largest market, we have also selected a strategic partner that will allow us to extend our cannabinoid pipeline. Otsuka has an excellent US commercial track record and a world leading CNS science base. We are delighted to be working with Otsuka to fulfill our ambition of developing a range of novel cannabinoid medicines to meet serious unmet medical needs."

Taro Iwamoto, PhD, President & COO, Otsuka Pharmaceutical Development & Commercialization, Inc., said, "Otsuka is delighted to be entering into this strategic relationship with GW. Otsuka's scientists consider cannabinoids to be a significant potential source of new medicines, and as world leading pioneers in this field, GW represents the ideal partner for Otsuka. Otsuka is committed to maximizing the potential of Sativex in the US market and looks forward to exploring a range of longer term cannabinoid product opportunities. We are confident that this is the beginning of a highly productive and valuable relationship for both companies."

There will be a conference call for analysts today at 8.30am GMT. Analysts should contact Gemma Cross Brown at Financial Dynamics on +44 (0) 20 7831 3113 for details. There will be a live audio web cast of this call, which will be accessible on the press releases page in the investor relations section of the GW website (www.gwpharm.com). A recording of this call will be available on the GW website later today.

Enquiries:
For GW:

GW Pharmaceuticals plc
Today: +44 20 7831 3113

Dr Geoffrey Guy, Chairman
Thereafter: + 44 1980 557000

Justin Gover, Managing Director

Mark Rogerson, Press and PR
Tel: + 44 7885 638810


Financial Dynamics
Tel: +44 20 7831 3113

David Yates, Nicola Daley

For Otsuka:

US Enquiries

Debbie Kaufmann
Tel: +1 240 683 3568

Europe Enquiries

Alison Ross
Tel: +44 1895 207 7122

Japan Enquiries

Hideki Shirai
Tel: +81 3 3292 0021

Notes to Editors

About Otsuka Pharmaceutical Co., Ltd

Founded in 1964, Otsuka Pharmaceutical Co., Ltd. is a healthcare company with the mission statement: "Otsuka - people creating new products for better health worldwide." Otsuka researches, develops, manufactures and markets innovative, original products, focusing its core businesses on pharmaceutical products for the treatment of disease and consumer products for the maintenance of everyday health. The Otsuka Pharmaceutical Group comprises 87 companies and employs approximately 27,000 people in 17 countries and regions worldwide. Otsuka and its consolidated subsidiaries earned US $6.8 billion in consolidated annual revenues in fiscal 2005. The Group has R&D facilities in Japan (Osaka and Tokushima), EU (Frankfurt) and US (Rockville, MD). Its commercial operations are headquartered in US (Rockville, MD and Princeton, NJ), EU (UK) and Japan (Tokyo). For additional information, visit www.otsuka-global.com

About GW

GW was founded in 1998 and listed on the AiM, a market of the London Stock Exchange, in June 2001. Operating under license from the UK Home Office, the company researches and develops cannabinoid pharmaceutical products that alleviate pain and other neurological symptoms in patients who suffer from serious ailments. GW has assembled a team of over 100 scientists with extensive experience in developing both plant-based prescription pharmaceutical products and medicines containing controlled substances. GW occupies a world leading position in cannabinoids and has developed an extensive international network of the most prominent scientists in the field. GW has to date entered into two additional Sativex license agreements – with Bayer HealthCare in the UK and Canada, and with Almirall in Europe (ex-UK). These agreements together provide payments to GW totaling up to £79m ($156m) as well as significant long term supply price provisions. For further information, please visit www.gwpharm.com

About Sativex

Sativex is an investigational product presented as a pump action oro-mucosal spray, which delivers a pharmaceutical formulation containing delta 9 tetrahydrocannabinol (THC) and cannabidiol (CBD). Each 100┬ÁL spray contains 2.7mg THC and 2.5mg CBD.

Sativex is standardized by both composition and dose and is supplied in small spray vials. Sativex is thought to act via cannabinoid receptors that are distributed throughout the central nervous system and in immune cellsi. These receptors are distributed throughout the pain pathways of the nervous system, and their activation is known to reduce pain in relevant pain models.

Sativex showed positive results in a completed Phase III study in Europe in 177 patients with cancer pain. Patients in the study had advanced cancer and were experiencing pain that was not responding adequately to strong opioid medication (e.g. morphine). In addition to study medication, all patients remained on their existing opioid and other analgesic medication during the trial. In this study, Sativex achieved a statistically significant improvement in comparison with placebo in pain as measured on a numerical rating scale (p=0.014), a primary endpoint of the study. A responder analysis showed that approximately 40% of patients on Sativex showed a greater than 30% improvement in their pain (p=0.024).

Outside the US, Sativex is approved and marketed in Canada for the symptomatic relief of central neuropathic pain in Multiple Sclerosis, and is the subject of an ongoing regulatory submission in Canada for the relief of cancer pain. Sativex is also the subject of an ongoing regulatory application in four selected European countries for the symptomatic relief of spasticity in MS.

About Cannabinoids

The cannabinoid (CB) receptor system is a complex and far-reaching system which has only started to become understood in the last decade or so. To date, CB1 and CB2 receptors have been identified and cloned. Initially, the chemicals which affect these receptors ("cannabinoids") were identified only within the cannabis plant, but extensive scientific investigation has now elaborated a series of endogenous chemicals which maintain this 'endocannabinoid system'. These endogenous cannabinoids are produced in human tissues, exert their actions within those tissues and are then destroyed locally. This allows the system to function in a fine-tuning, modulatory role, and abnormalities of the endocannabinoid system have now been found in several important diseases. Originally, it was believed that these receptors acted largely within the brain, but it is becoming increasingly clear that they are present at many different sites, in many different body systems.

The importance of the integrity of this system of receptors in maintaining several critical areas of mental and physical well-being is becoming clearer because of the type of research that GW and its collaborators are performing. Equally, this research work has identified several important disease areas where the administration of cannabinoids as medicines may lead to desirable therapeutic consequences. Cannabinoid modulators are showing promise in chronic painful conditions, in movement disorders, and in disorders of cell proliferation such as cancer. Furthermore, the role of cannabinoids in the brain may offer therapeutic promise in disorders of behaviour and mood. This is an area of active scientific discovery and therapeutic research which may deliver a range of new treatments to meet unmet medical needs.

This news release may contain forward-looking statements that reflect GWs current expectations regarding future events, including development and regulatory clearance of the GW’s products. Forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors, including (inter alia), the success of the GW’s research strategies, the applicability of the discoveries made therein, the successful and timely completion of uncertainties related to the regulatory process, and the acceptance of Sativex and other products by consumer and medical professionals.

1 Pharmaceutical Executive, May 2006
i Health Canada