UK MEDICINAL CANNABIS FIRM ON A HIGH WITH IPO

LONDON, June 21 (Reuters) - A British company developing the world's
first cannabis-based medicines for pain relief said on Thursday it
had increased the size of an initial public offering following strong
demand from investors.

GW Pharmaceuticals Plc's sale of a 14.3 percent stake, which was
nearly six times oversubscribed, raised 25 million pounds ($34.8
million) gross, or nine million pounds more than originally expected,
following a decision to allot extra shares.

A total of 13.7 million new shares were priced at 182 pence each,
valuing the group -- which believes it can help multiple sclerosis,
cancer and rheumatoid arthritis patients suffering nerve-damage pain
- -- at 175 million pounds.

"Clearly, we have a very unique investment proposition which seems to
strike a chord in the investment community," Managing Director Justin
Gover told Reuters.

Trading in the shares on London's junior Alternative Investment
Market will commence on June 28.

GW is the latest in a growing number of European biotechnology
companies to test the IPO market again after a funding drought since
the fourth quarter of 2000.

The Salisbury-based firm has created a range of prescription drug
products to harness the medicinal benefits of cannabis, which will be
delivered using an under-the-tongue spray, a fast-dissolving tablet
or an inhaler.

GW expects to seek approval from UK regulators for its first products
for multiple sclerosis and cancer pain in 2003, paving the way for
its first sales and profits the following year.

The three-year-old company recently extended the development
programme for its leading MS drug into Phase III trials, the last
hurdle before approval is granted.

It will use proceeds from its IPO to expand the clinical trial
programme and scale up production of cannabis plants, in secret
locations around the UK, from the current level of around 15 tonnes a
year.

Sales And Profits In 2004

Sufferers from MS, which attacks the central nervous system, have
been calling for a pain-relieving cannabis medicine for years and
many have broken the law by buying the drug from street dealers.

But the advent of cannabis-based prescription drugs will not
necessarily sway the wider debate over legalising of cannabis.

"What we are developing are very specific medicines, and what we are
doing has no implications for the use of herbal cannabis material,"
Gover said.

The group believes its medicines could go on sale in Britain early in
2004, with Europe and Canada following later that year and the United
States some 18-24 months behind.

Longer term, Chairman Geoffrey Guy said, the company has at least 10
years of research ahead of it in investigating the full potential of
dozens of active molecules in cannabis.

These chemicals could also have a role to play in reducing
inflammation and treating central nervous system disorders, including
epilepsy and schizophrenia, he said.

Any patients hoping to get "high" by popping GW's pills are likely to
be disappointed, however, since levels of the narcotic
tetrahydrocannabinol (THC) will be kept deliberately low.

"The patients we are talking about have severe disability, or their
scope of activity is greatly restricted by their disease -- the last
thing we want to do is to have them debilitated by being stoned," Guy
said.

Collins Stewart is adviser and broker to the company.