Tuesday, December 21, 2004

LONDON, England (Reuters) -- British biotech firm GW Pharmaceuticals' cannabis-based medicine has been tipped for approval for the first time, with Canadian regulators giving the go-ahead for its multiple sclerosis drug.

The news comes just weeks after British regulators said they wanted more evidence about the benefits of the drug, which is used to treat the central nervous system disease, delaying its approval in the UK and battering GW Pharma's shares.

"As far as I'm aware, it's the first approval for a prescription cannabis medicine anywhere," a spokesman for the firm told Reuters on Tuesday.

Shares in the firm jumped as much as 9.5 percent. They had lost about a third of their value since the start of December when UK regulators asked for more studies.

Canada has confirmed that Sativex qualifies to be considered for approval. GW is required to respond and accept conditions within 30 days. If the response is acceptable, the regulator will proceed to finalize the marketing authorization.

Analysts said the Canadian system for drug approval meant the rest of the process was little more than a formality. GW Pharma said it expected full approval by early next year.

"Under the Canadian system, full approval should be relatively straightforward from here," said Jon Senior, analyst at Evolution Beeson Gregory, who rates the stock an "add." He said the relatively modest gains in the wake of the Canadian news meant the stock looked good value at these levels.

The medicine, administered by means of a spray into the mouth, will be exclusively marketed in Canada by Germany's Bayer, the firm said.

GW grows thousands of marijuana plants at a secret location in the English countryside, having been granted a dispensation by the government to use the plant for medical research.

The firm had hoped for UK approval to come through last year, but the drug has been held up by a series of regulatory delays. The latest UK delay could put back the launch of the drug in this country by at least six months.