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Soaring cannabis stock primed and ready for a take-out

Investors were put on bid alert after it emerged the company had appointed Wall Street heavyweight Morgan Stanley to oversee the potential beauty parade.
Soaring cannabis stock primed and ready for a take-out
The interest comes as the company as it prepares to bring to market Epidiolex, a cannabis-derived medication to treat a severe form of childhood epilepsy.

Shares in GW Pharmaceuticals PLC (LON:GWP, NASDAQ:GWPH) were up almost 20% in afternoon trade amid reports the company has multiple potential suitors.

Investors were put on bid alert after it emerged the company had appointed Wall Street heavyweight Morgan Stanley to oversee the potential beauty parade.

The interest comes as the company as it prepares to bring to market Epidiolex, a cannabis-derived medication to treat a severe form of childhood epilepsy.

Analysts say the drug has the potential to deliver annual sales of around US$800mln.

According to Reuters, the financial news agency that broke the story, the identities of the potential GW Pharma suitors are unknown.

However it points out the big beasts in this sphere of the drugs market are Novartis (ETX:NOVN), Bayer (ETR:BAYN) and Almirall (BME:ALM).

However London broker Numis reckons Lundbeck (CPH:LUN), Otsuka (TYO:4578) and Biogen (NASDAQ:BIIB) might also be in the running.

Analyst  Paul Cuddon said: “With phase-three data on Epidiolex  (the key attraction)…due in the coming weeks and more data expected in December the timing is intriguing, allowing a potential acquirer an effective first option on the data.”

However he cautioned there are still “significant clinical, regulatory and commercial risks” associated with the treatment.

The shares, which are LSE and Nasdaq-quoted, were up 105p at 631.5p in a busy transatlantic trading session. That values the business at just shy of £2bn.

In the past six months the stock has advanced 178%, buoyed by some encouraging headline results from a phase III clinical trial of Epidiolex.

On the back of that the company was able to raise £190mln from US investors to bankroll the further development of its lead product.

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