GW Pharmaceuticals, the British drugmaker, has won approval to conduct key trials in the United States on its cannabis-based treatment for cancer pain.
The company expects to start testing Sativex on American patients with advanced cancer later this year. The news came as the company unveiled plans to raise $15 million in a discounted share placing to help fund the trial while it looks for an American partner.
The company also revealed Polygon Investment Partners, had invested Â£8.1 million in GW, giving the New York-based fund manager a 5 per cent stake in the company.
The decision by the US Food and Drug Administration to allow GW to jump straight to phase III trials marks an important step forward for Sativex. Some observers have expressed concerned a cannabis-based drug would not be accepted in the US, a key market.
"This is a significant milestone towards entering the challenging, but lucrative US market," the company’s house brokers ABN Amro wrote.
Delay to a launch in the UK, where the protracted approval process has taken many years longer than the company and investors were hoping, led to fears in the last year that GW may be facing cash problems.
However, at the end of 2005 GW clinched a European marketing deal with Spain’s Almirall, which included a Â£12 million signing fee.
"Six months ago it was hard to get investors to talk about anything else, but now we have a very strong balance sheet," GW’s managing director Justin Gover told AFP today.
The shares dropped to record lows in the middle of last year, but have more than doubled since, lifted by rising hopes Sativex will finally be approved. The US trial, which will involve 250 people, is likely to last between 24 and 36 months.
Sativex, administered via an under-the-tongue spray, is being proposed by GW in the UK as a treatment for muscle spasticity (spasms and stiffness) in people with multiple sclerosis.
Following the Almirall deal the company can now afford to complete the ongoing trials requested by British regulators when they rebuffed the initial marketing application in June. Results from the study are due in the Spring.
In April the drug was approved by Canadian regulators for the relief of neuropathic pain in multiple sclerosis. Studies for this use are also ongoing in Europe.
In the US, however, the drug will be first tested on people with advanced cancer who are in severe pain but find no relief from traditional medicines such as morphine. They will be given Sativex on top of the current medication.
GW shares, which gained more than 7 per cent yesterday on speculation the company would release positive news on Sativex. However, the shares gave back those gains today, losing 6.88 per cent to stand at 149p.