October 25, 2021

Medical cannabis company GW Pharmaceuticals’s Nasdaq share price jumped 46% to a peak of $216.01 on Wednesday following news of a takeover deal by Jazz Pharmaceuticals.

GW Pharmaceuticals, which develops Epidiolex, a cannabis-based epilepsy drug, will be acquired by Dublin-based Jazz Pharmaceuticals in a cash-and-stock deal worth $7.2bn.

Shareholders of GW Pharmaceuticals will receive $200 in cash and $20 in Jazz common stock per share.
Cambridge-based GW Pharmaceuticals produces Epidiolex, an epilepsy drug for children containing cannabidiol as the active compound. Epidiolex brought GW $132 million in sales in the last quarter.

The drug was approved by the US Food and Drug Administration (FDA) in 2018 for children with Dravet Syndrome and Lennox-Gastaut Syndrome epileptic seizures, the first cannabis-based drug to be approved by the FDA. In 2020, the FDA approved Epidiolex for tuberculosis sclerosis complex (TSC) patients.
GW is currently conducting clinical trials for another drug to treat multiple sclerosis with cannabidiol as the active compound. New Frontier Data estimates the US medical cannabis sector will generate annual sales of $16 billion by 2025.

Nasdaq-listed Jazz specialises in neuroscience products, including narcolepsy drug Xyrem, which generated $1.64 billion in sales for the company in 2019 and accounted for 75% of the company’s total revenue. However, Xyrem’s FDA-granted exclusivity, the sole rights to market the drug formulation for narcoleptic conditions it can treat, is due to expire in 2023. New competition is expected to enter the market and could impact Jazz’s Xyrem sales revenue.

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Snehal Shah