Irish-based Jazz Pharmaceuticals buys cannabis-focused drug firm

GW Pharmaceuticals sells a medication called Epidiolex for children with severe epilepsy. The drug’s active compound, cannabidiol, produces an anti-convulsant effect.

North American firm Jazz Pharmaceuticals has agreed to acquire cannabis-based medicinal drug company GW Pharmaceuticals for $7.2bn (€6bn) in a cash and share deal.

The company has a manufacturing plant in Athlone, Co Westmeath.

British-based GW Pharmaceuticals is the maker of the first drug derived from the cannabis plant to win approval in the US.

The company sells a medication, Epidiolex, for children with severe epilepsy. The drug was approved by the US Food and Drug Administration in 2018.

The drug’s active compound, cannabidiol, produces an anti-convulsant effect through its interaction with prominent components of the nervous system. The plants from which the compound is drawn are bred to be low in THC, the chemical associated with getting high.

GW is also in late-stage trials for another cannabis-based product to treat multiple sclerosis, and is working on candidates for autism and schizophrenia.

Jazz has an array of medications for cancer and other conditions and diseases, but is best known for its high-priced narcolepsy treatment Xyrem, which had sales of $1.64bn in 2019. However, with the drug due to lose exclusivity soon, revenue from it was expected to peak at $1.75bn in 2020.

The deal may lend further legitimacy to a growing segment of cannabis companies that focus on pharmaceutical-grade products. Such approaches are much safer in terms of regulatory risk, and allow the companies access to Europe’s markets.

As well as having a manufacturing presence here, Jazz Pharmaceuticals has its corporate headquarters in Ireland. The company has a stockmarket value of $8.7bn (€7.2bn). The proposed deal has been unanimously approved by the boards of both companies and is expected to close in the second quarter of this year.

GW’s rigorous approach to developing and producing its products has made the company a much-touted example of the potential for cannabis which many say is in the early stages of research and development for medical purposes despite its long history of recreational use.

More deals featuring cannabis companies in the US are expected as the industry anticipates regulatory headway under the new Democratic administration.

• Additional reporting by Bloomberg