CORRECTED-UPDATE 1-GW Pharma partners for cannabis drug in US

(Corrects Feb. 14 story in paragraph 14 to show Bristol-Myers does not make Abilify and co-markets the drug with Otsuka)

By Mark Potter

LONDON, Feb 14 (Reuters) - GW Pharmaceuticals Plc (GWP.L) has signed up Japan's Otsuka Pharmaceuticals Co. to develop and market pioneering cannabis-based drug Sativex in the United States, the UK company said on Wednesday, boosting its shares.

GW, which has a dispensation from the British government to use cannabis for medical research, said it would receive milestone payments of up to $273 million from privately owned Otsuka, including a signature fee of $18 million.

It will also receive a royalty on sales of "high-teen to 20" percent, Managing Director Justin Gover told Reuters.

GW shares jumped as much as 14 percent to an 11-month high of 114 pence on news it had found a partner to tackle the world's biggest market for medicines.

But by 0855 GMT the stock, which had risen strongly in recent weeks on hopes of a deal, was up 1.3 percent at 101p, valuing the business at about 122 million pounds ($238 million).

Sativex is an under-the-tongue spray, which is already on sale in Canada as a treatment for pain in multiple sclerosis.

It has incurred a number of delays in the UK but is currently being assessed by regulators in four European countries as a treatment to relieve spasticity in multiple sclerosis, with a decision expected later this year.

GW said it would start a Phase II/III clinical trial in the United States this year to assess Sativex as a treatment for cancer pain.

Otsuka, the world's 26th-biggest pharmaceutical company, will pay for this and any other U.S. trial of Sativex.

Gover said in a telephone interview that GW hoped to file the drug with U.S. regulators in 2010 and launch it in 2011.

Investec Securities, GW's broker, says Sativex can achieve peak annual sales in the United States of $390 million.

Otsuka specialises in central nervous system disorders. Its biggest product is schizophrenia drug Abilify, which is co-marketed with Bristol-Myers Squibb (BMY.N).

GW said it was also in talks with Otsuka over a research collaboration for its other cannabis-based projects. Gover said he hoped to announce a deal this summer.

GW grows thousands of marijuana plants at a secret location in the English countryside.

Cannabis has a history of medicinal use dating back to ancient Chinese times. Queen Victoria, whose physician described it as "one of the most valuable medicines we possess", is said to have taken cannabis tincture for menstrual pains.