Britain Approves GW Pharma's Cannabis Drug Sativex

Drugs regulators MHRA says Sativex granted British licence

HEALTHCARE

* GW in line for 10 mln pounds milestone payment from Bayer

* Shares up 11 percent at four-year high

(Adds GW Pharma statement, analyst comment, updates shares)

By Ben Hirschler

LONDON, June 18 (Reuters) - GW Pharmaceuticals Plc's (GWP.L) cannabis-derived medicine Sativex has been approved in Britain for treating spasticity in patients with multiple sclerosis, in a landmark decision for the small drugmaker.

The much-delayed product was finally granted a British licence on Thursday, an official from the Medicines and Healthcare products Regulatory Agency (MHRA) told Reuters on Friday.

The company later issued a statement confirming the move.

Clinical trials have shown GW's Sativex, which is sprayed under the tongue, reduces spasticity in multiple sclerosis (MS) in patients who do not respond adequately to existing therapies.

It became the world's first cannabis medicine to win regulatory clearance when it was approved in Canada in 2005 for neuropathic pain but its roll-out in Britain -- and other European markets thereafter -- is a larger sales opportunity.

GW and Germany's Bayer (BAYGn.DE), which will market the drug in Britain, plan to hold a press conference on Sativex on June 21.

A green light from the MHRA had been expected before the end of June but confirmation of approval will still be a relief to investors, who have seen a series of delays with the product.

Shares in the company jumped 11 percent to a four-year high of 143 pence on the news by 1400 GMT.

GW had originally hoped to win approval in 2003 for its drug -- which is extracted from marijuana plants grown at secret locations in the English countryside -- but the medicine has been hit by a string of regulatory delays in Europe.

GW said last month it also expected a regulatory green light in Spain shortly after the British approval, with other European countries following later.

Sativex will be sold in the rest of Europe outside Britain by Spanish drugmaker Almirall.

GW will receive a 10 million pounds ($15 million) milestone payment from Bayer as a result of British approval, while a further 2.5 million pounds is payable by Almirall following both regulatory and pricing approval in Spain.

WILL NHS PAY FOR IT?

Questions remain about Sativex's commercial potential.

In particular, the rate of uptake in Britain will likely be limited until the National Institute for Health and Clinical Excellence (NICE) decides whether it should be reimbursed on the National Health Service (NHS).

Analysts at Piper Jaffray, which acts as adviser to GW, forecast that peak sales in MS spasticity could reach 121 million pounds in Europe and Canada combined.

The drug could also be used longer-term to help treat cancer pain worldwide, opening up a market opportunity potentially worth over $500 million in annual sales, according to the brokerage. However, marketing approval for this second use is not expected before 2013.

Shawn Manning, an analyst at Singer Capital Markets, said a green light for cancer pain in the United States would be a major commercial breakthrough.

"That's a real opportunity, that will be the big market -- that's the real target for this product," he said. ($1 = 0.6743 pound)