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UK: Cannabis firm takes pot shot at London IPO
Ben Hirschler Reuters
Tuesday 15 May 2001 LONDON, May 15 (Reuters) - GW Pharmaceuticals, a British company developing the world's first cannabis-based medicine for multiple sclerosis patients, said on Tuesday it planned to list on the London stock market. The debut on the junior Alternative Investment Market, which is planned for late June, will be accompanied by a 16 million pound ($22.71 million) share placing with institutions and is expected to value the group at 140-170 million pounds. GW is the latest in a handful of European biotechnology companies to test the initial public offering (IPO) market again after a funding drought in recent months. The Salisbury-based firm is developing prescription drugs to harness the medicinal benefits of cannabis and has created a range of products which will be delivered using an under-the-tongue spray, a fast-dissolving tablet or an inhaler. It recently extended the development programme for its leading MS drug into Phase III trials, the last hurdle before approval is granted. Managing director Justin Gover said the product could reach the market in Europe and Canada in 2003, although winning a green light in the big United States marketplace would probably take two years longer. GW hopes to make a profit in 2004. Sufferers from MS, which attacks the central nervous system, have been calling for a pain-relieving cannabis medicine for years and many have broken the law by buying the drug from street dealers. GW, which also has programmes for cancer pain and rheumatoid arthritis, believes its medicine offers the pain relief benefits of cannabis without users getting "high". The three-year-old firm will use existing reserves of 5.5 million pounds and proceeds from its IPO to scale up production of cannabis five to 10 fold. It currently grows around 15 tonnes a year in 30,000 square feet of glasshouses. "Flotation will enable GW to take the next step in developing what began as a patient-driven proposition into a full service pharmaceutical company capable of establishing a position in several large markets," said Executive Chairman Geoffrey Guy. Guy previously co-founded the firm which became Phytopharm Plc (LSE: PYM.L - news) , another plant-based drug company developing products for bowel cancer and obesity. GW will license out its MS medicine -- which adviser Collins Stewart (LSE: CSH.L - news) estimates could sell as much as 500 million pounds a year -- to large a drug firm, in exchange for royalties. However, Gover said no negotiations were currently under way. BIOTECH IPO MARKET STIRS GW's decision to push ahead with its IPO may be a sign that sentiment towards biotechnology in Europe is starting to turn after a lean period due to the slump in Nasdaq valuations. "I think this activity is perhaps an indicator that the sector may be experiencing a slight resurgence of confidence," Gover told Reuters. On Monday, Britain's Cytomyx, which provides a range of services to support early stage drug discovery, announced plans to raised 2-3 million pounds via a listing on AIM in London. Swedish company Medicarb, whose lead product is a treatment for mastitis in cows, also plans an IPO later this month which will value the group at around $66 million and Swiss stem cell specialist Osiris Therapuetics is contemplating an early float. Keith Redpath, head of life sciences research at WestLB Panmure, said the market remained patchy. "If there is a reasonable story things seem to be a little easier, but it's nothing like a year ago. We won't have the 39 biotech IPOs we saw in Europe last year -- over the rest of the year there might be 10 or 15," he said.
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