GW Pharmaceuticals share price dived this morning after a Sunday newspaper claimed GlaxoSmithKline had pulled out of talks to license the companys cannabis medicines. But insiders claim the news is ancient history and is an cynical attempt by an undisclosed party to push the share price down and make it cheaper to buy.

Stock fell 8% to 161p in early trading on Monday and GW Pharmaceuticals was forced to issue an RNS statement in response. The company insists it is still on track to sign its first commercial partnership in the first half of 2003 and to submit its regulatory application to the Medicines Control Agency during the first quarter of 2003.

Many of the mornings trades were sells by retail investors. However stock recovered quickly after institutions bought in.

The Sunday Telegraph said yesterday that GWs chairman Geoffrey Guy had been in discussions with the drug giant to license out its pain relief drug for MS sufferers for an upfront payment of 20 million and royalties of 20-30% but GSK had abandoned the talks. The story did not appear in any other newspaper.

An insider said: GSK were extremely close to signing up and put in a lot of money but the deal fell over for political reasons to do with the US. But this is all ancient history. Other negotiations are going swimmingly. Whoever is behind the story in the Sunday Telegraph probably has an interest in pushing down the shares so they can buy in and get a pretty good return when a licensing deal is signed.

GWs managing director Justin Gover refused to confirm or deny whether GSK had been involved in talks with the company. We do not know the source of the story but its frustrating for us and its difficult to respond to speculation, he said. But were not just looking at one company and one deal.

Analysts failed to balk at the Telegraph story, which they described as irrelevant.
'I would have been surprised if theyd signed a deal with Glaxo, said Dr. Julie Simmonds, analyst at Evolution Beeson Gregory. It doesnt fit in with the style of the management because theyd have to give up control.

House analyst Dr. Jonathan Kwok at Collins Stewart was philosophical. It doesnt make me concerned. If when Antisoma was in discussions with Roche deals with other companies had fallen over, would it have made any difference? When the deal was announced the share price still doubled.

GW still has a healthy 20 million in the bank and, market rumours aside, a licensing deal should provide welcome upside for the share price.

any reason for today's drop?

Of interest today in case anyone missed it


LONDON (AFX) - GW Pharmaceuticals PLC has been allowed by US medicine watchdogs to carry out pivotal trials of its experimental cannabis-based medicine Sativex, in patients suffering from cancer pain.

The British company also revealed today a significant investment from Polygon Investment Partners, providing an 8.1 mln stg cash injection and giving the New York-based fund manager a 5 pct 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.

Meanwhile, the extra cash means GW can start trials in the US without having to find a partner first, and helps to allay overall funding concerns at the AIM-listed company.

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 12 mln stg signing fee. Together with the US financing, GW Pharma is starting the new year with 30 mln stg on its books.

'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 AFX News in an interview.

Following today's news and the Almirall deal, analyst Jonathan Senior at Evolution raised his price target on GW stock to 172 pence, from 130 previously.

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.

In late afternoon trade the shares were trading 7 pence lower at 153 pence, valuing GW at 174 mln stg.

Sativex, administered via an under-the-tongue spray, is being trialed as a treatment for severe pain caused by a variety of illnesses, for people who find traditional pain-relieving medicines ineffective.

In the UK, GW is trying to get Sativex approved initially to treat 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, which will hopefully provide further evidence of the drug's effectiveness, 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 opioid medicines, for example morphine. They will be given Sativex on top of the current medication.

Similar trials in Europe generated positive results, hence the decision by the US watchdog to allow the advanced trials to commence without earlier studies being conducted in the country.

Gover said he believes Sativex has a good chance of being approved in the US, given the permission from the FDA and the data already gathered. That should also help attract partners, to help pay for the trials and ultimately market the product in the US.

'With the (permission from the FDA) and the data we have, the regulatory prospects look very good, and that will be the deciding factor for a partner'.

And with the company's improved financial position, he stressed there is no urgency to find one.

'It's not my expectation that we will fund the whole US development without a partner, but the funding means we can start and it's not so significant to us whether the partner is signed in six months, or a year, or more. It will take some time, but the important thing is we have time to do it.'

The company believes pursuing the cancer pain indication will provide the fastest route to market for Sativex in the US, because of the type and size of patient population and the high need for an effective product.

Two 250-patient studies are planned, and the first patients are expected to enter the first trial in the middle of this year. The product is likely to be filed for approval 2-3 years later.

GW Pharma is due to report full-year results Jan 19.

amy.brown@afxnews.com

they are raseing fund 6mil shares at 139 trials in usa starting but will take all this year

explain what you are saying???????

ukre i will haVe a go,when price was 158 -160 placeing at 139 can drag down share price ,also Very small trial group for up to 3 years people i think were looking for biger news from usa, canada is useing the product so it can be got by crossing oVer boarder and we haVe had 100% rise in 3 month time to take profit for the lucky few, any more good news and we will moVe on higher ft.times put aViod rec on this yesterday or today.

gwp is in the strongest position it has ever been in, approval in canada, named patient basis in the uk, a very good new european partner (almirall), trials in spain and italy (with maybe more to come with results (jan 19), an IND in the states, and as a consequence of this a new licensing partner in the us....which should be very lucrative, and no looming icebergs for the good ship gw