GW Pharma shares plunge after cannabis drug fails final-stage trial

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The Independent Online

Shares in GW Pharmaceuticals lost more than a quarter of their value yesterday after the announcement that a trial of its cannabis-based drug Sativex had failed its final phase of testing.

The trial is one of three the company is undertaking to assess the suitability of cannabis as an effective treatment for combating multiple sclerosis and relieving pain for cancer sufferers.

The bad results announced yesterday, which centred on a mouth spray form of the drug used to relieve neuropathic pain among MS sufferers, caused the group's share price to tumble to 52p, down 19.5p or 27 per cent.

However, analysts covering the pharmaceutical sector stressed that it does not mean the end for Sativex. The results were due to an unexpectedly large placebo effect among some of the patients in the trial, which the company said it had only become aware of during testing.

About half of the patients treated with Sativex saw a 30 per cent improvement in pain relief, according to a scoring system. However, to show the trial had worked, the company was required not only to demonstrate that the drug actually reduced pain, but also that it was more effective than a placebo. The trail results showed that nearly half of the placebo group that had not received Sativex also enjoyed a 30 per cent pain improvement.

According to Justin Gover, GW Pharmaceutical's managing director, the drop in share price was an over-reaction by the market. "The results are certainly unfortunate," he said. "But all our testing shows that this treatment works and is effective. With the way the market is at present, any negative news does not go down well with investors."

Analysts agreed that, despite the results, the failure of the trial was due to technicality rather than a fundamental problem with the treatment. "Today's phase three result showed yet again that GW's lead product works," Ibraheem Mahmood, an analyst at Investec said. "It did not, however, reach a statistically watertight conclusion. We believe this was down to the challenges of designing trials in conditions such as pain and MS, which are innately variable and subjective."

GW has two further trials in which to assess Sativex. The drug is being trailed in Europe to test its effectiveness in treating MS and in the US for cancer pain.

Both trials are due to be completed in the fourth quarter of this year and neither uses the dosing issue that tripped up the neuropathic tests. "The statistics [on the neuropathic test] were clouded," says Gover. "But we can take a large degree of comfort from the fact that we have good results in early testing for the other trials."

If GW can make future tests work, Gover believes it will reach a turning point that includes milestone payments. "Develop-ment of Sativex for its two key indicators remains on track, with the potential to trigger a total of £13m to £15m in milestones on the first UK and EU approvals – still possible in 2009/10," agreed analysts at Edison.

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