Placing and Admission to AIM

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Jun 21, 2001

GW Pharmaceuticals plc ("GW" or "the Company"), a pharmaceutical company developing an innovative range of prescription medicines that harness the medicinal benefits of cannabis, announces the successful completion of the placing relating to its flotation on the Alternative Investment Market of the London Stock Exchange.

13,736,264 new ordinary shares have been placed with UK institutional investors at the Placing Price of 182p per ordinary share.

The issue was significantly oversubscribed and the Placing is priced towards the top end of the expected range.

In response to institutional investor demand, the size of the Placing has been increased and additional shares allotted, increasing the amount of new money raised for the Company from £16 million to £25 million (gross).

The Company will have a market capitalisation of £175 million at the Placing Price, including the £25 million (gross) proceeds.

Proceeds from the Placing will be used to:

  • fund the expansion of GW's late stage clinical trials for Multiple Sclerosis and Cancer Pain;
  • expand the Company's cultivation and production facilities in anticipation of the initial commercial launch of its products; and
  • accelerate the Company's international research activities in Europe and North America.

The extra funds raised will allow GW to make additional investments to:

  • accelerate the Company's development programmes for certain additional target markets, in particular Rheumatoid Arthritis;
  • enhance its primary cannabinoid research programme; and
  • strengthen the Company's international development activities

Dealings in the ordinary shares are expected to commence on Thursday 28 June 2001.

  • Collins Stewart is nominated adviser and broker to GW.

Commenting on the announcement, Dr Geoffrey Guy, Executive Chairman of GW Pharmaceuticals said:"We are delighted with the interest shown in GW by institutional investors during the marketing process. Investor demand is robust and the Placing is significantly oversubscribed. In response to demand we have increased the number of new shares being issued in the Placing, making more shares available to investors and increasing the amount of new money raised from £16 million to £25 million (gross).

The Placing will allow GW to continue to capitalise on this unique business opportunity. The additional proceeds will enable GW to broaden the scope of its product development programme and also further increase confidence in a timely and successful outcome for the clinical development programmes in our initial target markets - Multiple Sclerosis and Cancer Pain. We are excited about the next stage of the Company's development."

Enquiries:

GW Pharmaceuticals pl: (21/06/01) + 44 20 7067 0700

Dr Geoffrey Guy, Executive Chairman: (Thereafter) + 44 1980 557000

Justin Gover, Managing Director

Collins Stewart Limited:

Andrew Richmond:+44 20 7523 8418

Paul Wedge:+44 20 7523 8412

Square Mile BSMG Worldwide: + 44 20 7067 0700

Susan Ellis/Kevin Smith

GW Pharmaceuticals - Key Information

The Business

GW is a pharmaceutical group developing a portfolio of prescription medicines derived from cannabis to meet patient needs in a wide range of therapeutic conditions. GW maintains control over all aspects of the product development process - botanical research, cultivation, extraction, formulation into drug delivery technologies, clinical trials and regulatory affairs.

The Group has a broad product portfolio and the Directors have identified certain key markets for its products including Multiple Sclerosis, Cancer Pain and Rheumatoid Arthritis.

The Group's product for Multiple Sclerosis has recently entered into pivotal Phase III clinical trials and other products are in Phase II clinical trials. GW's products are to be administered by means of pharmaceutical delivery technologies including a sub-lingual (under the tongue) spray, sub-lingual tablets and an inhaler.

Key strengths

The Directors believe that GW has a strong competitive position worldwide in relation to cannabis-based medicines and that there are considerable barriers to entry to deter potential competitors. The Directors believe that, in particular, GW has the following key strengths:

  • a broad product portfolio under development;
  • its product for Multiple Sclerosis has already entered into final Phase III trials programme, and its products for several other markets are in Phase II clinical trials;
  • the long history of medicinal use of cannabis allows for rapid development timelines of GW's medicines;
  • there is a recognised need for prescribed cannabis-based medicines;
  • a management team with a proven track record and relevant experience;
  • its programme has the support of the UK Government and governments in North America and Europe; and it is currently, so far as the Directors are aware, the sole producer of pharmaceutical grade cannabis plant materials under licence in the world.

The Directors believe that these key strengths will enable the Company to capitalise upon the substantial market opportunity for GW's medicines.

Cannabis-based medicines

The beneficial therapeutic effects reported by patients who use cannabis appear to result from the interaction of certain cannabinoid molecules in the plant. These cannabinoids provide GW with a rich source of new medicines. Given the long history of medicinal use of cannabis, the Directors believe that the development of its cannabis-based medicines holds a greater certainty of success than many other biopharmaceutical or biotechnology programmes.

GW is developing a broad product portfolio of cannabis-based medicines. These are derived from standardised whole extracts of proprietary cannabis plant varieties which have been bred to provide a pre-determined content of selected cannabinoids. Extracts from plant varieties are then incorporated into a range of drug delivery technologies including a sub-lingual spray, sub-lingual tablets and an inhaler. These products undergo a full pharmaceutical development programme, including pre-clinical and clinical testing, with a view to obtaining approvals from regulatory authorities around the world.

Market strategy and opportunity

GW's strategy is to produce cannabis-based medicines for the worldwide market. Whilst GW will continue to regard its activities in the UK and Europe as its primary focus, it intends to develop further its activities in the United States. In addition, the Group will seek to roll out its products across the rest of the world.

The Directors have selected the following medical conditions as initial target markets:

  • Nerve damage pain and dysfunction, principally Multiple Sclerosis; and Cancer Pain.
  • Results from GW's early clinical trials in the initial target markets have provided the Company with the confidence to accelerate the product timetables for the medium and longer term opportunities in the pipeline.
  • Further potential markets for the Group's products include Rheumatoid Arthritis, Stroke/Head Injury, Migraine, Inflammatory Bowel Disease (IBD), Schizophrenia, Epilepsy and Movement Disorders (such as Parkinson's disease). All of these markets have been selected on the basis of evidence supporting the potential effectiveness of cannabis-based medicines.

The Directors believe that the market opportunity for GW's medicines is substantial.

Official support

GW's programme has the support of the UK Government and has been welcomed by other governments and organisations around the world. The UK Government has stated repeatedly that it will permit prescription of cannabis-based medicines, subject to regulatory approval from the Medicines Control Agency ("MCA").

Current Trading and Prospects

The Group has started its Phase III trials programme relating to Multiple Sclerosis, and the Directors believe that the prospects for revenue generation in this market are good. There are approximately 2.5 million people worldwide suffering from Multiple Sclerosis. The Directors believe that GW's product could take a significant share of this market.

In addition, the Directors expect to commence Phase III trials in Cancer Pain during the second half of 2001 and to expand Phase II trials for other target markets. The Directors believe the size of Cancer Pain and other target markets to be substantial and to offer significant opportunities for the Group.

The Directors expect that products for Multiple Sclerosis and Cancer Pain will be submitted for regulatory approval to the MCA in 2003 and, subject to such regulatory approval being granted, being made available for sale in early 2004.

Reasons for the Placing and use of proceeds

The Placing will raise £23.5 million (net of expenses) for the Company. These proceeds will be used to:

  • fund the expansion of its late stage clinical trials;
  • expand the cultivation and production facilities in anticipation of the initial commercial launch of its products; and
  • accelerate the Group's international research activities in Europe and North America.

The Directors believe that the increased financial resources and enhanced profile of the Company within the market place will greatly assist GW in its product commercialisation strategy.

Admission to AIM will also provide opportunities for the Company's employees to participate in the future success of the Company and should help attract and retain high calibre staff.

The Placing

The Company is issuing 13,736,264 new Ordinary Shares pursuant to the Placing at the Placing Price, which will raise £23.5 million (net of expenses) and will represent approximately 14.3 per cent. of the enlarged issued share capital following the Placing. The new Ordinary Shares have been placed by Collins Stewart with institutional investors.

The Placing is conditional upon Admission becoming effective and the Placing Agreement becoming unconditional in all respects.

There are no existing shareholders who are selling shares pursuant to the Placing. Following the Placing, it is expected that the interests of the Directors will, in aggregate, amount to 45.8 per cent. of the enlarged issued share capital.

Placing Statistics

Placing Price 182p
Number of ordinary shares in issue prior to the Placing 82,290,835
Number of shares being issued 13,736,264
Number of ordinary shares in issue followingthe Placing 96,027,099
Estimated expenses of the Placing £1.5 million
Estimatednet proceeds of the Placing receivable by the Company £23.5 million
Percentageof the enlarged ordinary issued share capital available in the Placing 14.3 percent
Market capitalisation at the Placing Price £174.8 million

Lock-in arrangements

The Directors have undertaken not to dispose of any of their Ordinary Shares (or any interest therein) for a period of one year from the date of Admission. They have further undertaken, that for a further six months from the date falling one year from the date of Admission, not to dispose of more than 50 per cent. of their Ordinary Shares.

In addition, shareholders who will hold in aggregate 10.9 per cent. of the issued share capital of the Company immediately following the Placing have entered into lock-in agreements.

- Ends -

This press release constitutes an investment advertisement for the purposes of Section 57 of the Financial Services Act 1986. It is issued by the Company and its contents have been approved for the purposes of that Section by Collins Stewart Limited, which is regulated in the conduct of investment business by The Securities and Futures Authority Limited.

For the purposes of this press release Collins Stewart Limited is acting as financial adviser to the Company and no one else. In approving this advertisement Collins Stewart Limited has relied on information supplied by the directors of the Company. If you require advice in relation to this press release you should contact your solicitor, accountant or other professional adviser under the Financial Services Act 1986.

The offer for securities in the Company will not be made, directly or indirectly, in or into the United States, Canada, Australia, the Republic of Ireland or Japan. Accordingly, copies of this press release are not being and must not be mailed or otherwise distributed or sent in or into or from the United States, Canada, Australia, the Republic of Ireland or Japan and persons receiving this press release (including custodians, nominees and trustees) must not distribute or send it into or from the United States, Canada, Australia, the Republic of Ireland or Japan.

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