Jazz to Buy Cannabinoid Drugmaker GW Pharma in $7.2-Billion Deal
Jazz Pharmaceuticals entered into a definitive agreement to acquire GW Pharmaceuticals for $220 per share, or a total consideration of $7.2 billion, adding the latter’s cannabinoid product platform, including Epidiolex (cannabidiol), to its neuroscience pipeline, the companies announced Wednesday. The transaction, which has been unanimously approved by the boards of both companies, is expected to close in the second quarter.
Under the agreed terms, GW Pharma’s stockholders will receive $200 in cash and $20 in Jazz ordinary shares, with the total price representing a premium of around 50% to GW Pharma’s closing share price on February 2. “Given the strength of our balance sheet and the meaningful financial drivers of the transaction, we are confident in the value we can deliver to both companies’ shareholders and patients,” remarked Jazz CEO Bruce Cozadd.
Commenting on the deal, SVB Leerink analysts said the purchase of GW Pharma “is an interesting strategic fit with Jazz’s neuroscience focus and adds a platform of innovative cannabinoid product candidates along with a highly specialized manufacturing expertise.”
Near-term ‘blockbuster’ potential for Epidiolex
According to Jazz, the acquisition is expected to diversify its product offering by adding a third high-growth commercial franchise in the areas of sleep disorders, oncology and epilepsies. Epidiolex, which Jazz believes has “near-term blockbuster” potential, became the first cannabinoid-derived drug to be approved in the US when it was cleared by the FDA in 2018 for seizures linked to Lennox-Gastaut syndrome or Dravet syndrome in patients two years and older. The oral solution’s label was expanded last year to include seizures associated with tuberous sclerosis complex, while the therapy is also authorized in the EU, where it is marketed as Epidyolex. Jazz, which recorded third-quarter sales of $456.9 million for its neuroscience unit, comprising the bulk of its $600-million revenue total, noted that Epidiolex has generated approximately $510 million annually in the two years of it being on the market.
Jazz expects that the merger will create a “neuroscience leader” that will be able to better advance Epidiolex, as well as its existing narcolepsy drug Xywav (calcium/magnesium/potassium/sodium oxybates), which was approved by the FDA last July. It added that the combined company will boast a pro-forma pipeline of 19 clinical development programs consisting of “highly differentiated assets” that aside from sleep disorders and epilepsy, would also span movement disorders, psychiatry, haematology and solid tumours.
Jazz says the takeover is expected to provide accelerated double-digit top-line revenue growth and be accretive in the first full year of combined operations, and then “substantially” add to revenues after that. Meanwhile, both Jazz and GW Pharma have a significant presence in the UK, which they said is expected to “remain an important part of the combined enterprise.”