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Irish firm agrees to pay $7.2 billion for Epidiolex maker GW Pharma

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An Irish pharma company said it has entered an agreement to buy medical cannabinoids maker GW Pharmaceuticals. Jazz Pharmaceuticals, Dublin, said it agreed to pay $7.2 billion in cash and stock for United Kingdom-based GW, maker of Epidiolex, a THC-free drug that contains high levels of CBD, and which has proven effective in the treatment of rare forms of epilepsy.

GW is considered to be the biggest medical cannabinoid company in the world, having developed its products under strict regulations for medicine in the markets where it is present. Epidiolex is the only cannabis medicine approved by the U.S. Food and Drug Administration (FDA).

$6.7 billion in cash

Under the agreement, Jazz is to acquire GW for $6.7 billion in cash plus $500 million in Jazz stock. The deal is expected to close in the second quarter of 2021.

GW’s has reported that Epidiolex, which also has distribution in Spain, Italy and France, accounts for roughtly 85% of income, although the company has also invested heavily in research, having spent as much as $290 million on R&D to date. Jazz said it sees immediate opportunities to expand the market for Epidiolex in Europe.

GW holds 57 U.S. patents and more than 750 patents internationally, with another 259 pending. Most cover cannabinoid product candidates including nabiximols, which are being trialed as treatment for multiple sclerosis and spinal cord injury. The company also is running trials for cannabinoid treatments to address autism and schizophrenia.

‘Strong balance sheet’

“Given the strength of our balance sheet and the meaningful financial drivers of the transaction, we are confident in the value we can deliver to both companies’ shareholders and patients,” Jazz CEO Bruce Cozadd said.

Jazz Pharmaceuticals had reported prior to the deal that it expected revenues for 2020 would come in at about $2.3 billion. Founded in 2003, Jazz develops drugs for sleep and movement disorders, and for cancer. The company’s leading product is Xyrem, an expensive treatment for narcolepsy that also has FDA approval in the U.S.

GW Pharmaceuticals is currently the defendant in a lawsuit brought late last year by Canadian cannabis giant Canopy Growth, which claims GW infringed on its patent for a specific CO2 extraction method.

Both Jazz and GW Pharmaceuticals are traded on the Nasdaq exchange.

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