GW's cannabis spray Sativex is approved - at what cost?

Sativex is made from marijuana plants

GW Pharmaceuticals' revolutionary cannabis-derived spray, Sativex, which is used for treating spasticity in patients with multiple sclerosis has been approved and will cost patients approximately GBP£11 a day when used as a prescribed treatment.

Sativex, which is sprayed under the tongue, has been in development for over a decade and became the world's first cannabis-based medicine to gain regulatory clearance after being approved for neuropathic pain in Canada in 2005.

GW Pharmaceuticals has been hoping to introduce the spray into the European markets for some time and, on Friday, finally gained approval in the UK, where it will be launched by its licensee, Bayer AG. Sativex is expected to be given a regulatory green light in Spain very soon and will then be rolled out across the whole of Europe by Spanish drugmaker Almirall. Europe represents a much larger sales opportunity for GW Pharmaceuticals and the company has been hoping for approval in the region for many years.

Originally, GW was hoping to win approval for Sativex in 2003, but the drug was hit by a series of delays in Europe and its approval in the UK now marks an unusual success for GW, as small pharmaceuticals have notoriously struggled to gain investor confidence in recent times.

Pam Macfarlane, Chief Executive of the MS Trust said, "We have been aware for a long time, based on comments from people with MS, that cannabis-based medicines can significantly improve spasticity, which is a common, complex symptom of MS. For this reason the MS Trust has campaigned for the availability of a licensed medicine that can be properly controlled and prescribed."

GW's next steps

GW will be given GBP£10 million from Bayer for the approval of Sativex, but the companies now need to convince the UK's National Institute for Health and Clinical Excellence (NICE) that Sativex is a cost-effective treatment for use on the NHS. Industry experts believe that sales of the drug could be slow until this approval has been given.

Sativex, which is extracted from marijuana plants grown at secret locations in the English countryside, would cost the NHS GBP£125 per 10 ml vial which is enough to last the average patient just over 11 days, equating to about GBP£11 for each day of treatment.

Macfarlane said: "We have also invested money and resources in developing the body of knowledge by funding clinical research into the effectiveness of cannabis-based medicines. The launch of Sativex is therefore a milestone for the NHS and the MS Trust, and we are delighted. It will now be down to specialist professionals to assess people and we hope that this can happen quickly."

Analyst Shawn Manning at Singer Capital Markets said GW had achieved what many of its peers had not in taking a proprietary compound from laboratory to market, but he was cautious on sales potential in Europe, and downgraded the firm to "fair value" from "buy" with a price target of 137 pence.

How Sativex works

Sativex is made up primarily of two cannabinoids extracted from marijuana - cannabidiol (CBD) and delta-9-tetrahydrocannabinol (THC) and is an effective treatment for muscle stiffness and spasms in about half of patients not benefiting from current therapies - which is estimated to be about 6,000 people in the UK.

Analysts at Piper Jaffray, which advises GW, say peak sales in MS spasticity could hit GBP£121 million in Europe and Canada combined.

The drug can also be used to help treat cancer pain and GW are hoping to market it for this use in the future. Analysts have forecasted that this could generate annual sales in excess of US$500 million, but marketing approval for its use as a painkiller for cancer patients is not expected before 2013.

Dr. Geoffrey Guy, chairman of GW, said: "The first six months of this year have proven the most important in GW's history, in which we have made material progress towards Sativex's launch in Europe and generated positive cancer pain data."

Sativex was actually expected not to get approval in the UK until the end of this month. When news of its approval emerged last Friday, shares in GW Pharmaceuticals jumped up 11 percent to a four-year high of 143 pence. However, since releasing news of the actual amount Sativex will cost, GW's shares have dropped by two percent.

Related links:

The best of both | Emerging importance of health economics | How to become a healthcare heavyweight | Cannabis: Saviour or sin? | Teva hits 15-year high | Riding the wave

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