(Reuters) - GW Pharmaceuticals Plc GWP.L, a developer of marijuana-based epilepsy treatments, is working with an investment bank after other drugmakers approached it to express interest in an acquisition, people familiar with the matter said.
The move shows how the Cambridge, England-based company is emerging as a coveted target for larger pharmaceutical companies thanks to its key drug, Epidolex, which uses cannabis-based compounds to treat epilepsy.
GW has hired investment bank Morgan Stanley (MS.N) to help handle the overtures, the people said this week. The company is not currently interested in exploring a sale, and there is no certainty that any deal will occur, the people added.
The identity of the potential suitors could not be established. The sources asked not to be identified because the deliberations are confidential.
GW declined to comment. Morgan Stanley did not respond to a request for comment.
GW shares ended trading in London up 0.6 percent at 526.50 pence (70 U.S. cents), giving the company a market capitalization of 1.6 billion pounds ($2.1 billion). American depositary receipts of the company jumped as much as 22 percent in New York following the Reuters report.
GW’s move is the latest sign that dealmaking in the biotechnology sector is picking up. Last month, Pfizer Inc (PFE.N) clinched a $14 billion acquisition of U.S. cancer drug company Medivation Inc MDVN.O.
Major players in the market for central nervous system treatments, including Allergan Plc (AGN.N) and Biogen Inc (BIIB.O), are searching for deals to build out their commercial presence and research and development pipelines.
Logical buyers for GW would include the companies that have partnered with it to distribute its marketed drug, Sativex, a nasal spray for multiple sclerosis that is also based on marijuana, one of the people said.
Epidolex is in late-stage clinical trials and could receive approval from the U.S. Food and Drug Administration as soon as next year. It could eventually produce annual sales in excess of $800 million, according analysts at investment bank Cowen & Co.
The drug’s success is especially important to GW because of the tepid performance of Sativex, which has been marketed since 2010.
Sativex was never approved in the United States, and only produced $2 million in sales in the latest financial quarter.
GW Pharma is also exploring early-stage treatments for other illnesses, including diabetes and schizophrenia.
Reporting by Carl O'Donnell in New York and Arno Schuetze in Frankfurt; Additional reporting by Greg Roumeliotis in New York and Ben Hirschler in London; Editing by Andrew Hay and Jonathan Oatis