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UK: GW needs cash infusion after appeal setback
Stephen Foley The Independent
Saturday 11 Jun 2005 GW Pharmaceuticals, the company hoping to launch the UK's first cannabis-based prescription drug for multiple sclerosis, is facing a cash crunch, it admitted yesterday. The company confirmed it had lost its appeal over a regulatory decision against approval of the drug, and said it will now have to complete an expensive extra trial to get the under-the-tongue spray, Sativex, on the UK market. GW's failure pushes out the likely launch date for Sativex to late 2006 and delays a milestone payment of UKP17m from its marketing partner, Bayer. The company has just UKP16m of cash left and is currently spending more than UKP1m a month. Its shares were the worst performers on the stock market yesterday, down 25p to 70.5p. They have now fallen more than 40 per cent since it was first reported this week that the company had failed to overturn the negative ruling by the regulator, the Medicines and Healthcare Products Regulatory Agency (MHRA). GW said it would try to sell the marketing rights to Sativex in Continental European countries to try to raise funds. Investors should expect a deal by the end of this year, the company said. Mike Booth, an analyst at Canaccord, said that he still expected GW to run out of cash during 2006. "Even if such a deal can be signed in time, we consider it unlikely that it would provide enough cash to supply adequate balance-sheet strength in the near term," he said. The Medicines Commission, the appeals body within the MHRA, upheld last December's ruling that GW has so far failed to prove that Sativex is an effective treatment for the spasticity associated with MS. The spray has been approved for sale in Canada as a treatment for MS pain, and UK patient groups criticised the ruling yesterday. Justin Gover, GW's managing director, said: "We didn't get this saga in Canada, so I don't think you could say we were naive about the regulatory process, but the reality is that the UK process was much more complex than anticipated." Mr Gover ruled out tapping shareholders for more cash to try to shore up the company's finances. The shares are now 65 per cent below the level at which GW raised UKP20m in 2003, when directors also sold UKP8.5m of shares. Geoffrey Guy, the company's founder and chairman, sold UKP5m.
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