Prominent US Healthcare Fund Subscribes for Significant Equity Stake in GW

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Aug 06, 2009

GW Pharmaceuticals plc (GWP:AIM), the developer and manufacturer of a range of new cannabinoid medicines, including Sativex, today announces that it has signed an agreement with funds controlled by Great Point Partners (“Great Point”), a United States-based specialist healthcare institutional investor, to subscribe for 7,553,920 new GW ordinary shares at 78 pence per share. This agreement follows a recent unsolicited request by Great Point for it to take a significant equity position in the Company.

New Shares Issued Raising $11.2m (£6.6m)

In addition, GW has signed an agreement with M&G Investment Management Ltd (“M&G”), its largest institutional shareholder, to subscribe for 917,000 new ordinary shares at 78 pence per share, thus maintaining M&G’s shareholding percentage prior to the subscription.

In total, the subscription has raised $11.2 million (£6.6 million) before expenses. The subscription price of 78 pence per share compares with a closing price of 77 pence per share on the previous day.

In addition, GW has issued to Great Point warrants to subscribe for 3,776,960 GW shares, 1,888,480 of which have an exercise price of £1.05 per share, and the remaining 1,888,480 have an exercise price of £1.75 per share. The warrants can be exercised at any time prior to the fifth anniversary of their issue.

Justin Gover, Managing Director of GW, said: “We are pleased that such a prominent US healthcare fund has sought to take this significant equity stake in GW. Great Point’s investment widens and internationalises GW’s institutional shareholder base and reflects GW’s emerging presence in the US market. The investment also serves to further enhance GW’s strong cash position.”

David Kroin, a founder and Co-Portfolio Manager at Great Point, said, “Great Point has been following GW for some time and has identified it as a compelling investment opportunity, particularly following the recent strong clinical data on Sativex. Our in-market research confirms the excitement in the clinical community for a product with a new mechanism to treat both Multiple Sclerosis spasticity as well as cancer pain.  We look forward to being part of the next phase of the Company’s development and helping GW to build a presence in the US investor community.”

The gross proceeds of the subscription for £6.6m (approximately £6.3m net of expenses) will be used for general working capital purposes and will provide additional balance sheet resources to further the Company’s R&D and clinical trial programmes.

On 20 May 2009, GW reported that cash and short term deposits at 31 March 2009 were £11.8m. A further £8m, in the form of a milestone payment from GW’s licensing partner, Almirall, was received in early April 2009. Upon Sativex approval in the UK and Spain, expected around the end of 2009 / early 2010, GW expects to receive milestone payments from its licensing partners totaling £12.5m.

The new shares represent approximately 7.0 per cent of the Company’s issued share capital prior to the subscription. Following the subscription, GW will have a total of 129,269,355 ordinary shares in issue, of which Great Point will hold 5.8 per cent.

M&G is a substantial shareholder in the Company and accordingly their subscription is classified as a related party transaction under the AIM Rules. M&G Group, through a number of subsidiaries, currently has an interest in ordinary shares in the Company, representing 10.82% of the issued share capital. Following M&G’s subscription for 917,000 new ordinary shares, M&G retains its total holding of 10.82% of the issued share capital of GW immediately following completion of the subscription. The Directors consider, having consulted with the Company’s nominated adviser, that the terms of the subscription are fair and reasonable insofar as shareholders are concerned.

This issue of new shares falls within the authority approved by shareholders at the Company’s Annual General Meeting on 14 January 2009. Application will be made today for the new shares to be admitted to AIM, a market of the London Stock Exchange (“Admission”). The subscription will be completed upon Admission, which is expected to become effective on 13 August 2009. When issued, the new shares will rank pari passu in all respects with the Company’s existing ordinary shares.

Rodman & Renshaw, LLC, a subsidiary of Rodman & Renshaw Capital Group, Inc. (Nasdaq: RODM) acted as the exclusive placement agent for the subscription with Great Point.

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