GW Pharmaceuticals plc (“GW”) and Bayer AG (“Bayer”) have entered into an exclusive marketing agreement for GW’s cannabis-based medicinal extract product, to be marketed under the Sativex® brand name.
Bayer has obtained exclusive rights to market Sativex in the UK. In addition, Bayer has the option for a limited period of time to negotiate the marketing rights in other countries in European Union and selected other countries around the world.
The financial terms of this partnership have been established to yield equal long term value to each partner. GW has maintained a significant share of long term product revenues whilst benefiting from a signature fee, an innovative advance working capital facility and milestone payments in the near term to further enhance GW’s cash position.
The medicine has been developed by GW to provide a medically acceptable cannabis-derived product for the treatment of the debilitating symptoms of Multiple Sclerosis (MS) and severe neuropathic pain. The product is a whole plant medicinal cannabis extract containing tetranabinex (Tetrahydrocannabinol (“THC”)) and Nabidiolex (cannabidiol (“CBD”)) as its principal components. The medicine is administered by means of a spray into the mouth.
GW submitted a product licence application for Sativex to the UK Medicines and Healthcare Products Regulatory Agency (“MHRA”) in March 2003.
Sativex and a THC medicine are also undergoing Phase III trials for the treatment of cancer pain. If approved, Bayer will also market these medicines for cancer pain.
In addition to a share of product revenues, GW has received a signature fee and will receive additional fees on regulatory approval in the UK of the initial indications of MS, neuropathic pain and cancer pain, totalling £25 million. In the event that Bayer exercise the option for countries outside the UK, additional milestones shall be payable on a country by country basis.
Of the £25 million milestone payments, £10 million can be drawn by GW in advance as an interest-free working capital facility to support ongoing preparations for market launch of Sativex. The facility can be drawn by GW at GW’s discretion until MHRA approval is obtained. On approval, Bayer has the option to convert the facility into a milestone payment or to convert into GW shares at an agreed premium to the share price at the time of conversion. The facility is subject to additional conditions if MHRA approval is not obtained by 30 September 2004.
GW is to be responsible for commercial product supply and has entered into a supply agreement with Bayer. GW will manage the supply of product through a range of contract manufacturing partners, arrangements for which are all in place.
Dr Geoffrey Guy, Executive Chairman of GW, said: “We are delighted to have entered into this partnership with Bayer. Having recently submitted the regulatory dossier for Sativex to the UK regulatory authorities, this announcement is a further significant achievement for GW. It is GW’s first commercial collaboration and marks the start of a new phase in the company’s history. As a leading global pharmaceutical company, Bayer is well placed to maximise the market opportunity for GW’s product.”
Commenting on the commercial terms of the agreement between the two companies, Dr Guy added: “GW’s commercial strategy is to maximise the value of its products by entering into agreements at a late stage of development. The terms of this agreement reflect the merits of this strategy. Most importantly, GW retains a significant interest in revenues from product sales.“
Dr. Christa Kreuzburg, Head of Europe for Bayer HealthCare’s Pharmaceuticals Division, said: “We are delighted that GW has selected Bayer as its marketing partner to bring this innovative medicine to market. Supporting medical professionals with effective therapies for the management of MS and severe neuropathic pain is an area of largely unmet need. I am therefore very excited that Bayer will be bringing a product to market with the potential to make a significant contribution in this area. Our two companies are now working closely to prepare for market launch in the UK. Sativex will enhance our portfolio in the UK extremely well and strengthen the market position of Bayer Pharmaceuticals”.