HIGH HOPES FOR GW'S MEDICINAL CANNABIS

Investors Trip Over Themselves For A Stake In The Only Firm With A Licence
To Grow Marijuana

LAST time Geoffrey Guy tried to bring a pharmaceutical company to market,
he couldn't create enough investor interest. Ethical Holdings, which
specialised in drug delivery, failed to float in June 1997. This time, it
couldn't have been more different. To a fanfare of press interest, his
latest venture, GW Pharmaceuticals, has just raised £25 million, well over
the projected £16 million, and valued Dr Guy's interest in the company at
£47 million. Not bad for a man whose business is selling marijuana. In just
four years, he has moved from failure to a six-times oversubscribed
success, in an area where no other company is yet attempting to tread,
although of course that may now change.

By curious coincidence GW, the only company with a licence to grow cannabis
for medical purposes, announced its successful flotation on the same day
that Meconic, which deals in heroin and cocaine for medical purposes, was
bought by Johnson Matthey. Meanwhile, cannabis is moving off the street and
into Parliament, with Peter Lilley, the senior Tory backbencher, calling
for decriminalisation. His surprise intervention follows the decision by
Lambeth police to cease prosecuting cannabis users.

The money raised by GW will be used to expand phase three clinical trials
for its pain-relief drug for multiple sclerosis and cancer patients, to
accelerate development research for a rheumatoid arthritis drug, and to
expand cultivation and production facilities ready for the drug approval it
hopes will be forthcoming by 2003.

That cultivation, measured by the tonne, takes place in "greenhouses'' at
"secret locations'' in the South of England, facilities that Dr Guy
describes as "a cross between a spaceship and an operating theatre". Staff
are vetted and drug tested, and every bit of cannabis transported between
facilities must be accompanied by a written movement order.

For a long time, Guy says, "the people that would have liked to develop
cannabis-based medicines were generally not the people running drug
companies". Now they have come together, in the form of this dapper,
pinstriped, articulate salesman. He is careful choosing his words,
admitting that it is vital to keep careful control of this story, or he
will lose the benefits of the rapid achievements made so far.

He rarely refers to cannabis by name, preferring to speak coyly of "the
material''. Given that he is teetotal, decaffeinated and non-smoking, it
seems rude to ask if he inhaled at college. He did not. His managing
director, Justin Gover, admits to have "come into contact with the material
before, but not for many, many years". They are both at pains to emphasise
that the Home Office has not "legalised cannabis" for GW, as is often
stated. It is the final cannabis-derived drugs, if passed by the regulator,
that will be legal, not cannabis itself - just as morphine is derived from
opium. At the moment they have a licence from the Home Office, dating from
June 1998, to "cultivate, possess and supply'' an otherwise illegal
substance for medical purposes.

Patients have been queuing up to get on their trials; they have had to hire
a full-time nurse to "counsel patients that recruitment into clinical
trials can't be done overnight".

Of the 3,000 MS patients that responded to a questionnaire, a third said
they already used cannabis; the others were put off by the legal and
smoking aspects.

So how did GW rather than anyone else manage to persuade the Government to
offer its support? "We were uniquely qualified to do it," says Guy,
referring to his training as a doctor at Barts and his background in drug
delivery with Ethical Holdings and plant-based medicine with its offspring
company, Phytopharm. He had long been interested in the therapeutic
possibilities of cannabis, but it was at a 1997 conference on the subject
organised by the Pharmaceutical Society and the MS Society that he realised
that wider sentiment was starting to change.

"Patients were turning up in court, admitting to possession of these
materials, and were being let off or given very light sentences, and there
was sympathy for their predicament," recalls Guy.

But the pharmaceutical industry is a conservative beast. "At that meeting
someone said: 'Look, isn't there a drug company here? How can we move
ahead?' I could see a few faces I recognised, sinking quietly into their
seats, they probably didn't even want people to know they were there. I
thought here goes, stood up, and talked for 20 minutes."

Guy was part of a delegation that approached the Home Office later that
year, and was told that although it had no plans to reschedule cannabis (it
is currently in schedule 1, along with other drugs of no medical value such
as LSD and ecstasy) it would "welcome research". Others apparently took
this as a no, but he saw it as a challenge and pressed on. After presenting
a complex proposal describing his planned route from plant to medicine, the
licence was granted.

Under usual plant-medicine rules it would take several years to establish a
crop of sufficient size, purity and strength to allow research to begin. GW
skipped this stage by bringing in a Dutch company called Hortapharm, run by
Americans with a similar interest in medicinal cannabis. They had already
started a growing programme to encourage stronger quantities of certain
cannabinoids, and so "from day one we already had all the starting
materials as a basis for pharmaceutical products". This, says Gover, helps
to explain the apparently extraordinarily short time from outset of
research to predicted market-time. Some analysts are not so sure. Warnings
have been voiced that Guy's big-talking history at Ethical and Phytopharm
should not inspire confidence, while the outspoken Erling Refsum of Nomura
says that Guy is "underestimating the regulatory difficulties" and has "far
too optimistic a view" on how rapidly the first drug can be brought to market.

"You can buy a better drug cheaper on the corner of the street," he
disparages, pointing to the lack of sparkling sales of Marinol, the only
other cannabis-related drug on the market. Guy is careful to explain why
US-made Marinol, a chemically synthesised version of THC, one of cannabis's
active ingredients, has not been a success. THC is what gives the high when
cannabis is used recreationally, and is what medical research initially
focused on. But GW's research has shown that as important is CBD, or
cannabidiol, which has antiinflammatory properties of its own and takes
away some of the side-effects, the high in other words, of the THC.

Marinol, which is THC only, is taken orally, and as the average punter at
Glastonbury could vouchsafe, THC has a rather stronger and more
unpredictable psychoactive effect when eaten than when inhaled, to the
degree that patients in the US, trying to use it to treat appetite
suppression, have found it very difficult to use.

GW, Guy underlines, is developing sprays and inhalers rather than pills,
and is focusing on using THC and CBD together, in their more natural
plant-extracted form, where they can cancel out each other's side-effects.
Guy does plan to take GW's drugs to the US, and says that the Government
there, despite being rather more "robust" in its drugs enforcement than the
UK, has indicated it will "welcome a solution based on science".

He hopes to start clinical trials there early next year. A letter of
recommendation from the Home Office may have helped Guy's case, as will the
fact that he will import only the finished drug into the US, leaving all
that naughty weed cultivation in the UK.