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.

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