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RNS Number : 6809G
GW Pharmaceuticals PLC
09 August 2016
GW Pharmaceuticals plc Reports Third Quarter 2016 Financial
Results and Operational Progress
- Positive Phase 3 Epidiolex pivotal trial in Lennox-Gastaut
Syndrome (LGS) -
- Positive FDA pre-NDA meeting - NDA for Dravet syndrome and LGS
on track for H1 2017 submission -
- Conference call today at 8:30 a.m. EDT, 1:30 p.m. BST -
London, UK, 9 August 2016: GW Pharmaceuticals plc (NASDAQ: GWPH,
AIM: GWP, GW, the Company or the Group), a biopharmaceutical
company focused on discovering, developing and commercializing
novel therapeutics from its proprietary cannabinoid product
platform, announced financial results for the third quarter ended
30 June 2016.
"We have now reported two positive Phase 3 trials for Epidiolex
and are on track for an NDA filing that includes both the Dravet
syndrome and Lennox-Gastaut Syndrome indications. We believe that
these Phase 3 data show that Epidiolex has the potential to provide
a robust and clinically meaningful reduction in seizures in these
highly treatment-resistant populations together with an acceptable
safety and tolerability profile," stated Justin Gover, GW's Chief
Executive Officer. "Our recent successful financing has provided GW
with the necessary capital to move forward with confidence in
preparing to execute a highly successful launch."
RECENT OPERATIONAL HIGHLIGHTS
-- Epidiolex(R) (CBD) orphan epilepsy program in Dravet
syndrome, Lennox-Gastaut Syndrome (LGS), Tuberous Sclerosis Complex
(TSC) and infantile spasms (IS)
o Phase 3 development programs:
-- Positive results in first Phase 3 Dravet syndrome trial
-- Positive results in first Phase 3 LGS trial
-- Data presentations expected at upcoming American Epilepsy
Society Annual Meeting in December
-- Positive Dravet syndrome Pre-NDA meeting held with FDA
-- NDA on track for H1 2017 submission for both Dravet and LGS
indications
-- Data from second LGS trial expected at end of Q3
-- Second Phase 3 Dravet syndrome trial ongoing
-- Phase 3 trial in TSC ongoing
-- Phase 3 trial in IS to commence in Q4 2016
o Expanded access program and open label extension:
-- Over 1,000 patients now on Epidiolex treatment under Expanded
Access Treatment INDs, U.S. State programs, and open label
extension trial
-- Advanced clinical programs in multiple cannabinoid pipeline product candidates:
o CBDV Phase 2 partial-onset epilepsy study in adults ongoing.
Part A complete and Part B underway with data expected H1 2017
o CBDV pre-clinical research ongoing within field of autism
spectrum disorders. Initial open-label clinical evaluation expected
to commence in H2 2016, with Phase 2 trials expected to commence in
H1 2017
o Neonatal Hypoxic-Ischemic Encephalopathy (NHIE) intravenous
CBD Phase 1 clinical program expected to commence in Q4 2016
-- Orphan Drug and Fast Track Designations granted from FDA and
EMA
o THC:CBD Phase 1b/2a study for the treatment of Recurrent
Glioblastoma Multiforme (GBM) fully enrolled with data expected in
Q4 2016
o Sativex(R) Phase 2 study in children with spasticity due to
cerebral palsy fully enrolled with data expected Q4 2016
o THCV Phase 2 study in type 2 diabetes completed, primary
endpoint not achieved
FINANCIAL HIGHLIGHTS
-- Loss for the nine months ended 30 June 2016 of GBP46.7
million ($62.2 million) compared to GBP32.3 million for the nine
months ended 30 June 2015. This increased loss primarily reflects
investment in the Epidiolex Phase 3 pivotal trials program.
-- Cash and cash equivalents at 30 June 2016 of GBP191.2 million
($254.3 million) compared to GBP234.9 million as at 30 September
2015. Subsequently in July 2016 a follow-on offering raised total
net proceeds after expenses of $273.1 million (GBP206.4
million).
Conference Call and Webcast Information
GW Pharmaceuticals will host a conference call and webcast to
discuss the third quarter 2016 financial results today at 8:30 a.m.
EDT / 1:30 p.m. BST. To participate in the conference call, please
dial 877-407-8133 (toll free from the U.S. and Canada) or
201-689-8040 (international). Investors may also access a live
audio webcast of the call via the investor relations section of the
Company's website at http://www.gwpharm.com. A replay of the call
will also be available through the GW website shortly after the
call and will remain available for 90 days. Replay Numbers: (toll
free):1-877-660-6853, (international):1-201-612-7415. For both
dial-in numbers please use conference ID # 13642862.
Enquiries:
GW Pharmaceuticals plc
Stephen Schultz, VP Investor
Relations 401 500 6570
FTI Consulting (Media Enquiries)
Ben Atwell / Simon Conway +44 20 3727 1000
FleishmanHillard (U.S. Media)
212 453 2382 / 917
Paddi Hurley / Adam Silverstein 697 9313
Peel Hunt LLP (UK NOMAD)
James Steel +44 20 7418 8900
GW Pharmaceuticals plc
("GW" or "the Company" or "the Group")
Financial Results for the Third Quarter Ended 30 June 2016
GW Overview
GW was founded in 1998 and is a biopharmaceutical company
focused on discovering, developing and commercializing novel
therapeutics from its proprietary cannabinoid product platform in a
broad range of disease areas. GW has established the world leading
position in the development of plant-derived cannabinoid
therapeutics through its proven drug discovery and development
processes, intellectual property portfolio and regulatory and
manufacturing expertise. The Company's lead cannabinoid product
candidate is Epidiolex(R), a liquid formulation of pure
plant-derived cannabidiol, or CBD, for which GW retains global
commercial rights, and which is in development for a number of rare
childhood-onset epilepsy disorders. GW has received Orphan Drug
Designation from the U.S. Food and Drug Administration, or FDA, for
Epidiolex for the treatment of Dravet syndrome, Lennox-Gastaut
syndrome, or LGS, Tuberous Sclerosis Complex, or TSC, and Infantile
Spasms, or IS, each of which are severe infantile-onset,
drug-resistant epilepsy syndromes. Additionally, GW has received
Fast Track Designation from the FDA and Orphan Designation from the
European Medicines Agency, or EMA, for Epidiolex for the treatment
of Dravet syndrome.
In March 2016, GW reported positive results from the first
pivotal Phase 3 trial of Epidiolex in Dravet syndrome and in June
2016 GW reported positive results from the first pivotal Phase 3
trial of Epidiolex in LGS. The Company expects to submit a New Drug
Application, or NDA, to the FDA in the first half of 2017 for
Epidiolex in both Dravet syndrome and LGS. GW is also building an
experienced commercial team in the United States in preparation for
the potential future launch of Epidiolex.
GW has a deep pipeline of additional cannabinoid product
candidates with an increasing focus on orphan pediatric neurologic
conditions. The Company's pipeline includes cannabidivarin, or
CBDV, which is in Phase 2 development in the field of epilepsy and
is also being researched within the field of autism spectrum
disorders, or ASD. In addition, GW has received Orphan Drug
Designation and Fast Track Designation from the FDA for intravenous
CBD for the treatment of Neonatal Hypoxic Ischemic Encephalopathy,
or NHIE, which is expected to enter Phase 1 development in the
fourth quarter of 2016.
Previously, GW commercialized the world's first plant-derived
cannabinoid prescription drug, Sativex(R) , which is approved for
the treatment of spasticity due to multiple sclerosis in 28
countries outside the United States.
U.S. Follow-on Offering
In July 2016, GW successfully completed a U.S. follow-on
offering on the NASDAQ Global Market issuing a total of 3,220,000
American Depositary Shares ("ADSs") at a price of $90.00 per ADS.
This total included the full exercise of the underwriter's option
to purchase an additional 420,000 ADSs and resulted in total net
proceeds after expenses of approximately $273.1 million (GBP206.4
million). The funds raised in this offering are primarily intended
to support pre-launch commercialization activities for Epidiolex,
further expansion of our Epidiolex manufacturing capability to meet
anticipated medium and long-term demand, manufacture of Epidiolex
inventory in preparation for launch, expansion of the market
opportunity for Epidiolex through clinical development of other
orphan indications advancement of other pipeline opportunities; and
other general corporate purposes, including working capital.
Epidiolex in Dravet syndrome and LGS
GW has been conducting pre-clinical research of CBD in epilepsy
since 2007. This research has shown that CBD has significant
anti-epileptiform and anticonvulsant activity using a variety of in
vitro and in vivo models and that it has the ability to treat
seizures in acute animal models of epilepsy with significantly
fewer side effects than existing AEDs.
GW's strategy for the development of Epidiolex within the field
of childhood-onset epilepsy is to initially concentrate formal
development efforts on four orphan indications: Dravet syndrome,
LGS, TSC, and IS, each of which are severe infantile-onset,
drug-resistant epilepsy syndromes. GW expects to further expand the
potential market opportunity of Epidiolex by targeting additional
orphan seizure disorders.
Dravet syndrome
Dravet syndrome is a severe infantile-onset, genetic,
drug-resistant epilepsy syndrome with a distinctive but complex
electroclinical presentation. Onset of Dravet syndrome occurs
during the first year of life with clonic seizures (jerking) and
tonic-clonic (convulsive) seizures in previously healthy and
developmentally normal infants. Prognosis is poor and approximately
14 percent of children die during a seizure or from Sudden
Unexpected Death in Epilepsy or SUDEP. Patients develop
intellectual disability and life-long ongoing seizures. There are
currently no FDA-approved treatments specifically indicated for
Dravet syndrome.
In March 2016, GW reported positive top-line results from the
first Phase 3 pivotal efficacy and safety study in 120 patients.
For the primary endpoint, patients taking Epidiolex achieved a
median reduction in monthly convulsive seizures of 39 percent
compared with a reduction on placebo of 13 percent, which was
statistically significant (p=0.01). A series of sensitivity
analyses of the primary endpoint confirmed the robustness of this
result. Results from secondary efficacy endpoints reinforced the
overall effectiveness observed with Epidiolex. In this study,
Epidiolex was generally well tolerated, with 84 percent of adverse
events reported to be mild or moderate. This trial is the largest
known controlled trial in Dravet syndrome ever conducted.
In addition to this first Phase 3 trial, GW is conducting a
second Phase 3 trial of Epidiolex in Dravet syndrome which is
expected to recruit 150 patients. This placebo-controlled trial
differs from the first Phase 3 trial in that it includes two
Epidiolex dose arms, at 20 mg/kg per day and at 10 mg/kg per day.
GW continues to work to enroll this trial and expects to report
results from the trial in 2017.
GW is working with the investigators in the first trial on a
manuscript for peer-review publication, which is expected in the
fourth quarter of 2016, and presentation of data at the upcoming
Annual Meeting of the American Epilepsy Society in December
2016.
LGS
LGS is a type of epilepsy with multiple types of seizures,
particularly tonic (stiffening) and atonic (drop) seizures.
Seizures due to LGS are hard to control and they generally require
life-long treatment as LGS usually persists into the adult years.
Historically patients with LGS have had few effective treatment
options. Intellectual and behavioral problems associated with LGS
are common and add to the complexity of this syndrome and the
difficulties in managing life with LGS. Drug resistance is one of
the main features of LGS.
In June 2016, GW reported positive top-line results from the
first LGS Phase 3 pivotal study in 171 patients. During the
treatment period, patients taking Epidiolex 20 mg/kg/day achieved a
median reduction in monthly drop seizures of 44 percent compared
with a reduction of 22 percent in patients receiving placebo, and
the difference between treatments was statistically significant
(p=0.0135). A series of sensitivity analyses of the primary
endpoint confirmed the robustness of this result. Epidiolex was
generally well tolerated in this trial with 78 percent of adverse
events reported to be mild or moderate. GW expects presentation of
additional data from this trial at the upcoming Annual Meeting of
the American Epilepsy Society.
The second Phase 3 trial differs from the first Phase 3 LGS
trial in that it includes two Epidiolex dose arms, at 20mg/kg and
at 10mg/kg. Originally expected to recruit 150 patients, this trial
reached a total of 225 patients randomized and is expected to
report top-line results at the end of the third quarter of
2016.
Open Label Extension
All patients in the randomized controlled clinical trials who
complete the treatment period are eligible to enroll in a long term
open label extension trial. To date, 99 percent of patients who
have completed the pivotal treatment period have elected to enroll
in the open label extension. The withdrawal rate in this open label
extension is 19 percent.
Epidiolex New Drug Application (NDA)
Following the success of the first Dravet syndrome Phase 3
trial, GW requested a pre-NDA meeting with the FDA to discuss a
proposed Dravet syndrome NDA. This meeting took place in July 2016
and included some discussion of the LGS trial data. As a result of
this constructive meeting, GW believes the guidance received was
both positive and supportive of the Company's proposed filing
strategy to submit a single NDA that includes Phase 3 data from one
Dravet trial and two LGS trials and which remains on track for a
submission in the first half of 2017. Subject to satisfactory
review, GW now anticipates simultaneous approval of both
indications and does not expect to wait for results from the second
trial in Dravet syndrome prior to this submission.
In order to support GW's NDA, the Company expects to provide the
FDA with data from ten Phase 1 and Phase 2 studies, as well as
safety data in over 1,800 patients from both the expanded access
program and pivotal programs, including over 450 patients with one
year or more of Epidiolex continuous exposure. This data is in
addition to the pivotal efficacy data.
Epidiolex Follow-On Indications
TSC
TSC is a genetic disorder that causes non-malignant tumors to
form in many different organs, primarily in the brain, eyes, heart,
kidney, skin and lungs. The brain and skin are the most affected
organs. The most common symptom of TSC is epilepsy, which occurs in
75 to 90 percent of patients, about 70 percent of whom experience
seizure onset in their first year of life. There are significant
co-morbidities associated with TSC including cognitive impairment
in 50 percent, autism spectrum disorders in up to 40 percent and
neurobehavioral disorders in over 60 percent of individuals with
TSC.
A number of patients with TSC have been treated with Epidiolex
in the expanded access program. At the 69th Annual Meeting of the
American Epilepsy Society, safety and efficacy data on 10 patients
diagnosed with TSC from the expanded access program were presented
by Massachusetts General Hospital for Children (Geffrey et al) on
Epidiolex treatment of refractory epilepsy in these patients. In
this poster, there was a response rate of 50%, 50%, 40%, 60% and
66% at 2, 3, 6, 9, and 12 months of treatment with Epidiolex,
respectively. Side effects were seen in five patients (50%) and
most were resolved with anti-epileptic drug or CBD dose
adjustment.
In April 2016, GW commenced a Phase 3 trial of Epidiolex in
patients with TSC. This dose-ranging trial is a 16-week comparison
of Epidiolex versus placebo in a total of approximately 200
patients, aged one to 65 years, to assess the safety and efficacy
of Epidiolex as an adjunctive anti-epileptic treatment. The primary
measure of this trial is the percentage change from baseline in
seizure frequency during the treatment period. Primary endpoint
seizures include focal motor seizures with or without impairment of
consciousness or awareness and generalized convulsive seizures.
Infantile Spasms (IS)
An infantile spasm is a specific type of seizure seen in an
epilepsy syndrome of infancy and childhood known as West syndrome.
West syndrome is characterized by infantile spasms, developmental
regression, and a specific pattern on electroencephalography, or
EEG, testing called hypsarrhythmia (chaotic brain waves). The onset
of infantile spasms is usually in the first year of life, typically
between 4 to 8 months of age.
In December 2015, at the Annual Meeting of the American Epilepsy
Society, safety and efficacy data on nine patients suffering from
epileptic spasms from the Epidiolex expanded access program were
presented by Massachusetts General Hospital for Children (Abati et
al). Epilepsy spasms often remain refractory to standard AEDs.
According to this poster, Epidiolex exerted its effects in a short
time course, with a response rate of 67 percent after two weeks and
78 percent after one month. Three of nine patients became
spasm-free after two weeks of Epidiolex treatment.
GW expects to commence a two-part Phase 3 trial of Epidiolex in
patients with IS in the fourth quarter of 2016.
Epidiolex Manufacturing
GW is currently manufacturing Epidiolex through utilization of
in-house and external third party facilities for various steps in
the production process. The Company expects to satisfy near-term
requirements for Epidiolex from these current facilities but is
also in the process of scaling-up various parts of the production
process both in-house and with external third parties. GW is
actively scaling its growing and manufacturing of Epidiolex to meet
anticipated commercial demand, if approved. In 2015, GW's
production of CBD botanical raw materials increased by a factor of
approximately 20 times) compared with the previous year and is
expected to double in 2016, equating to approximately 1.6 million
100mg/ml bottles of Epidiolex. With expectations of significant
demand for Epidiolex upon potential approval, GW plans to continue
expansion of Epidiolex plant growing capacity well beyond this 2016
goal. GW believes it is on track to be ready for FDA pre-approval
inspection anticipated in the second half of 2017.
Epidiolex Commercialization
GW is planning to commercialize Epidiolex in the United States
and elsewhere using its own sales and marketing organization. In
June 2015, the Company appointed Julian Gangolli to the newly
created position of President, North America and is leading GW's
commercial organization in the United States, which is based in the
Company's office at Carlsbad, California. GW has also recruited a
number of U.S. medical affairs, clinical trials and commercial
staff, many of whom have strong epilepsy knowledge and experience.
With the success of both Dravet syndrome and LGS Phase 3 trials,
the Company expects to expand this organization over the next 12
months. The creation of the medical affairs team has allowed GW to
open scientific and consultative communications with key
stakeholders, such as the patient and physician communities in the
United States.
The Company expects to implement a "high efficiency" commercial
deployment model expected to include a dedicated sales force of
approximately 50 to 60 sales professionals targeting approximately
4,000 - 5,000 U.S. physicians. This commercial organization will be
defined by a "high touch" patient, payor and physician
communication, education and distribution model, and one in which
the medical affairs organization will play a significant role in
establishing strong relationships with physicians and patient
organizations.
Outside the United States, GW is taking the initial steps toward
preparations for Epidiolex commercialization in Europe. The Company
has begun to hire key staff in medical affairs and marketing
disciplines to begin laying the groundwork for a more comprehensive
commercial organization.
U.S. Expanded Access Program (EAP)
In parallel with GW's formal clinical trial program, the FDA has
granted 20 intermediate expanded access Investigational New Drug
Applications (INDs) to independent physician investigators in the
U.S to treat a total of 465 children and young adults suffering
from intractable epilepsy with Epidiolex. In addition, the FDA has
granted further intermediate INDs to treat 455 additional patients
under expanded access programs supported by six U.S. states and for
which GW is supplying Epidiolex. The FDA may authorize expanded
access programs to facilitate access to investigational drugs for
treatment use for patients with a serious or immediately
life-threatening disease or condition who lack therapeutic
alternatives. The FDA has also authorized to physicians 14
individual emergency INDs and 3 individual patient non-emergency
INDs. As at 1 August 2016, approximately 500 patients were on EAP
treatment at 32 U.S. clinical sites.
Mechanism of action
There is a significant effort utilizing in vitro, in vivo and
other models of epilepsy to identify the mechanisms of action that
underpin the clinical effectiveness of Epidiolex (and other
cannabinoids) in epilepsy, including investigation of the effect of
cannabinoids on epilepsy associated gene expression. As recently
reported in Neurotherapeutics (Ibeas et al 2015), CBD is likely to
be acting via more than one mechanism of action with the effect of
reducing neuronal hyperexcitability. Importantly, the anti-seizure
effects of CBD are not dependent on cannabinoid receptors, nor on
sodium channels.
CBDV (cannabidivarin) Development Program
In addition to Epidiolex, GW's product candidates also include
the cannabinoid GWP42006, which features cannabidivarin (CBDV) as
the primary molecular entity. CBDV bears similarities in chemical
structure to CBD and has also shown anti-epileptic properties
across a range of in vitro and in vivo models of epilepsy. GWP42006
was also found to provide additional efficacy when combined with
drugs currently used to control epilepsy. Positive results using
genetic biomarkers for response have been identified.
GW has also evaluated GWP42006 in both general and syndromic
pre-clinical models of Autism Spectrum Disorders (ASD) yielding
promising signals on cognitive and social endpoints as well as
repetitive behaviors. These animal models include both genetically
determined and chemically-induced models of neurobehavioral
abnormalities, and include Rett syndrome and Fragile X syndrome
among others.
GW has completed a Phase 1 trial of GWP42006 in 66 healthy
subjects. In this trial, GWP42006 was well tolerated even at the
highest tested dose. There were no serious or severe adverse events
reported, nor any withdrawals due to adverse events.
GW is now pursuing multiple development programs for GWP42006
both within adult and childhood epilepsy and in childhood
behavioral disorders:
-- In epilepsy, GW is recruiting a Phase 2 trial of GWP42006.
This is a double-blind, randomized, placebo-controlled two-part
trial to investigate the pharmacokinetics, followed by efficacy and
safety of GWP42006 as add-on therapy in patients with inadequately
controlled focal seizures. The first part of this trial has
completed enrollment of 32 patients and the dose-ranging
pharmacokinetic and safety data has been reviewed by an independent
panel. GW has commenced the efficacy part of the trial and expects
to recruit an additional 100 patients. Data from this part of the
trial is expected in the first half of 2017.
-- In October 2015, GW announced that it had signed a Memorandum
of Understanding (MOU) with the NSW Government in Australia to
advance a research program for Epidiolex and CBDV in children with
severe, drug resistant childhood epilepsy. The MOU facilitates a
world first, Phase 2 clinical trial in children for GWP42006.
-- GW is conducting pre-clinical research into CBDV within the
field of ASD. Many of the pediatric intractable epilepsy conditions
within the Epidiolex expanded access program share considerable
overlap with ASD and these conditions often fall within the orphan
disease space. Initial clinical observations from treating
physicians suggest a potential role for cannabinoids in addressing
problems associated with ASD such as deficits in cognition,
behavior and communication. GW is working with investigators and
early open-label clinical experience is expected to commence in the
second half of 2016, with Phase 2 placebo-controlled trials within
ASD expected to commence in the first half of 2017.
Other Orphan/Neurology Pipeline Programs
Neonatal Hypoxic-Ischemic Encephalopathy (NHIE)
NHIE is acute or sub-acute brain injury resulting from
deprivation of oxygen during birth (hypoxia). GW estimates 6,500 to
12,000 cases of NHIE occur in the U.S. each year. Of these, 35% are
expected to die in early life and 30% are expected to develop
persistent neurologic disability. There are currently no
FDA-approved medicines specifically indicated for NHIE.
GW held a pre-IND meeting with the FDA to discuss the
development program for an intravenous CBD formulation (GWP42003)
in the treatment of NHIE. GW has received Orphan Drug Designation
and Fast Track Designation from the FDA for CBD for the treatment
of NHIE. GW has also received Orphan Drug Designation from the EMA
for CBD for the treatment of perinatal asphyxia, an alternate term
that describes the same condition.
GW expects to commence a Phase 1 trial of GWP42003 in healthy
volunteers for an intravenous CBD formulation in the treatment of
NHIE in the fourth quarter of 2016.
Glioma
GW is testing its product candidate GWP42002:GWP42003 (THC/CBD)
in the treatment of recurrent glioblastoma multiforme, or GBM, a
particularly aggressive brain tumor which is considered a rare
disease by the FDA and the EMA. The Company has received Orphan
Drug Designation from the FDA for GWP42002:GWP42003 for the
treatment of glioma. In pre-clinical models, GW has shown these
cannabinoids used together to be orally active in the treatment of
glioma xenografts and have shown tumor response to be positively
associated with tissue levels of cannabinoids.
GW has completed recruitment of 27 patients into a
placebo-controlled Phase 1b/2a trial in recurrent GBM. This study
first evaluated the safety of CBD:THC taken in combination with
dose-intense temozolomide, and then initiated a placebo-controlled
phase. Data from this trial is expected in the fourth quarter of
2016.
Other Pipeline Programs
Sativex for Cerebral Palsy in Children
GW is currently conducting a Phase 2 clinical trial of Sativex
to assess the efficacy, safety and tolerability of Sativex as an
adjunctive treatment to existing anti-spasticity medications in
children aged 8 to 18 years with spasticity due to cerebral palsy
or traumatic central nervous system injury who have not responded
adequately to existing anti-spasticity medications. This trial is a
randomized, double-blind, placebo-controlled trial followed by a
24-week open label extension phase and has completed enrollment of
72 patients. GW expects to report data from this trial in the
fourth quarter of 2016.
Schizophrenia
GW's product candidate, an oral formulation of GWP42003 (CBD),
has shown notable anti-psychotic effects in accepted pre-clinical
models of schizophrenia and in September 2015, GW announced
positive top line results from an exploratory Phase 2a
placebo-controlled clinical trial of CBD in 88 patients with
schizophrenia who had previously failed to respond adequately to
first line anti-psychotic medications. GW is evaluating appropriate
next steps regarding product development in schizophrenia with
future research likely focused on pediatric orphan neuropsychiatric
indications.
Type 2 Diabetes
GW is testing its product candidate GWP42004 in the treatment of
type 2 diabetes. GWP42004 is an orally administered product which
features plant-derived tetrahydrocannabivarin (THCV) as its active
ingredient.
In March 2014, GW commenced a placebo-controlled Phase 2 dose
ranging trial of GWP42004. The primary objective of this trial was
to compare the change in glycemic control in patients with type 2
diabetes when treated with one of three doses of GWP42004 or
placebo as add-on therapy, to metformin with the primary endpoint
being change from baseline to the end of treatment in mean
glycosylated hemoglobin A1c (HbA1c) level. The safety and
tolerability of GWP42004 compared with placebo was also being
assessed. This trial is now completed and a preliminary analysis of
the topline data shows that this trial did not meet its primary
endpoint. The drug was well tolerated with no serious adverse
events. GW is undertaking further evaluation of the data to
determine whether to pursue further development of GWP42004 within
the field of type 2 diabetes.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in
conjunction with the condensed consolidated financial information
contained herein, which has been prepared in accordance with
International Accounting Standard 34, Interim Financial Reporting.
GW presents its condensed consolidated financial information in
pounds sterling.
Solely for the convenience of the reader, unless otherwise
indicated, all pound sterling amounts stated in the Condensed
Consolidated Balance Sheet as at 30 June 2016, the Condensed
Consolidated Income Statement and the Condensed Consolidated Cash
Flow Statement for the three and nine months ended 30 June 2016
have been translated into U.S. dollars at the rate on 30 June 2016
of $1.32993 to GBP1.00. These translations should not be considered
representations that any such amounts have been, could have been or
could be converted into U.S. dollars at that or any other exchange
rate as at that or any other date.
Overview
GW generates revenue from Sativex product sales, license fees,
collaboration fees, technical access fees, development and approval
milestone fees, research and development fees and royalties.
The principal factors affecting GW's profitability and operating
cash flow are the amount and timing of GW-funded research and
development and capital expenditure, the rate of growth of Sativex
product revenues, and the amount of development and approval
milestone receipts from the Company's commercial partners.
Expenditure on research and development activities is recognized
as an expense in the period in which the expense is incurred. GW
incurs research and development expenditures that are funded from
GW's own cash resources. This typically relates to core research
and development spend on the Company's staff and research
facilities plus spend on the Epidiolex development program and
certain pipeline product Phase 2 trials, currently in the areas of
adult epilepsy and glioma. GW refers to this as "GW-funded research
and development expenditure."
A proportion of GW's research and development expenditure is
funded by the Company's collaboration partners. GW refers to this
as "development-partner funded research and development
expenditure". Most of this expenditure during the period relates to
the Sativex cancer pain development for the U.S. market which is
wholly funded by Otsuka.
Sales, general and administrative expenses consist primarily of
salaries, employer payroll taxes and benefits related to GW's
executive, finance, business development and support functions.
Other sales, general and administrative expenses include costs
associated with managing commercial activities and the costs of
compliance with the day-to-day requirements of being a listed
public company on NASDAQ in the U.S. and on the AIM Market in the
United Kingdom, including insurance, general administration
overhead, investor relations, legal and professional fees, audit
fees and fees for taxation services.
Net foreign exchange gains/losses primarily result from
unrealized gains/losses on translating the Group's U.S. dollar
denominated cash deposits to pounds sterling at the closing U.S.
dollar to pounds sterling exchange rate.
As a UK resident Group with operations in the U.S., GW is
subject to both UK and U.S. corporate taxation. GW's tax recognized
represents the sum of the tax currently payable or recoverable, and
deferred tax. Deferred tax assets are recognized only to the extent
that it is probable that taxable profits will be available against
which deductible temporary differences can be utilized. As a
company that carries out extensive research and development
activities, GW benefits from the UK research and development tax
credit regime, whereby the Company's principal research subsidiary
company, GW Research Limited, is able to surrender the trading
losses that arise from its research and development activities for
a cash rebate. This has resulted in a tax credit for each of the
periods reported herein, as disclosed in the tax benefit line of
the condensed consolidated income statements.
Results of Operations:
Comparison of the three months ended 30 June 2016 and 30 June
2015:
Revenue
Total revenue for the three months to 30 June 2016 was GBP2.3
million, compared to GBP8.6 million for the three months ended 30
June 2015. This decrease of GBP6.3 million primarily comprises:
-- GBP6.8 million decrease in research and development fees to
GBP0.4 million for the three months ended 30 June 2016 from GBP7.2
million for the three months ended 30 June 2015. This reflects the
impact of the conclusion of the Group's partner funded Sativex
Phase 3 cancer pain clinical trials. This revenue stream is
expected to conclude by 30 September 2016.
-- GBP0.4 million increase in Sativex product sales revenues to
GBP1.5 million for the three months ended 30 June 2016 compared to
GBP1.1 million for the three months ended 30 June 2015.
Other revenue streams, individually, did not change by a
material amount.
Cost of sales
Cost of sales for the three months ended 30 June 2016 of GBP0.7
million is consistent with the GBP0.7 million recorded in the three
months ended 30 June 2015.
Research and development expenditure
Total research and development expenditure for the three months
ended 30 June 2016 of GBP25.6 million increased by GBP4.8 million
compared to the GBP20.8 million incurred in the three months ended
30 June 2015.
Partner funded research and development expenditure decreased by
GBP6.8 million to GBP0.4 million for the three months ended 30 June
2016 from GBP7.2 million for the three months ended 30 June 2015.
This decrease reflects the conclusion and close out of the Sativex
Phase 3 cancer pain clinical trials.
GW-funded research and development expenditure increased by
GBP11.5 million to GBP25.2 million for the three months ended 30
June 2016 from GBP13.7 million for the three months ended 30 June
2015. The increase is due to:
-- GBP5.7 million increase in epilepsy and other GW funded
clinical program costs - reflecting the costs associated with GW's
continuing Dravet and Lennox-Gastaut syndrome Epidiolex studies,
setting up new Phase 3 studies, costs of our other pipeline studies
and costs of providing regulatory support and Epidiolex to an
increasing number of patients under FDA-authorized expanded access
INDs.
-- GBP3.1 million increase in research and development staff and
employment-related expenses linked to increased global headcount
combined with the transition of the Group's clinical headcount from
partner funded Sativex trials to the GW funded Epidiolex
development program.
-- GBP2.1 million increase in other overheads associated with
running clinical trials such as depreciation of R&D assets,
consumables and other property-related overheads. This increase has
been impacted by the Group's refocussing of assets on GW funded
activities from partner funded projects.
-- GBP0.6 million increase in costs of growing an increased
volume of high CBD plant material for the Epidiolex development
program.
Sales, general and administrative expenses
Sales, general and administrative expenses for the three months
ended 30 June 2016 of GBP5.6 million increased by GBP2.6 million
compared to the GBP3.0 million incurred in the three months ended
30 June 2015. This net increase is due to:
-- GBP2.2 million increase in payroll costs driven by increased
headcount within the Group's growing commercial operations.
-- GBP0.5 million increase in respect of property and travel
costs, primarily to the U.S. by staff involved in the establishment
of U.S. based operations.
-- GBP0.3 million increase in respect of increased accountancy,
audit and investor relation costs arising from GW's U.S. listing
and Sarbanes-Oxley compliance.
-- GBP0.4 million decrease in respect of commercialization costs
in the U.S. These costs follow discreet commercialization projects
and the timings of these is such that a decrease in costs is
observed from the comparative quarter.
Net foreign exchange gains / (losses)
Net foreign exchange gains for the three months ended 30 June
2016 was a gain of GBP11.2 million, compared to the GBP8.9 million
loss recorded for the three months ended 30 June 2015. The gain or
loss recognized relates to the remeasurement of the Group's U.S.
dollar denominated cash deposits to pounds sterling in the period
to 30 June 2016. The Sterling to U.S. dollar exchange rate has
moved from 1.4365 at 31 March 2016 to 1.32993 at 30 June 2016.
Dollar denominated cash deposits totalled $215.8 million at 31
March 2016 and $204.5 million at 30 June 2016.
Taxation
The tax benefit was GBP6.1 million for the three months ended 30
June 2016. This represents an increase of GBP2.8 million compared
to a GBP3.3 million benefit recorded in the three months ended 30
June 2015.
In the three months ended 30 June 2016, GW recorded a tax
benefit of GBP6.1 million made up of: (i) the recognition of an
accrued GBP4.8 million research and development tax credit expected
to be claimable by GW Research Limited in respect of research and
development expenditure incurred in the three months ended 30 June
2016; (ii) the recognition of GBP0.3 million of research and
development federal tax credits in respect of the year ended 30
September 2015 for the Group's U.S. subsidiary, GW Pharmaceuticals
Inc.; and (iii) recording of GBP1.0 million of current tax credit
in respect of activities of the Group's U.S. subsidiary, GW
Pharmaceuticals Inc. during the year ended 30 September 2016.
In the three months ended 30 June 2015, GW recorded a tax
benefit of GBP3.3 million comprising the recognition of an accrued
GBP3.4 million research and development tax credit expected to be
claimable by GW Research Limited in respect of the research and
development expenditure incurred in the three months ended 30 June
2015. This was offset by a GBP0.1 million reduction in the deferred
tax asset held by the Group's commercial subsidiary GW Pharma
Limited, as the company utilizes brought forward losses to offset
against its current period profits.
Loss
The Group reported a loss after tax for the three months ended
30 June 2016 of GBP12.2 million compared with a loss after tax for
the three months ended 30 June 2015 of GBP21.4 million.
Results of Operations:
Comparison of the nine months ended 30 June 2016 and 30 June
2015:
Revenue
Total revenue for the nine months to 30 June 2016 was GBP8.6
million, compared to GBP22.9 million for the nine months ended 30
June 2015. This decrease of GBP14.3 million primarily
comprises:
-- GBP14.8 million decrease in research and development fees to
GBP3.9 million for the nine months ended 30 June 2016 compared to
GBP18.7 million for the nine months ended 30 June 2015. This
reflects the impact of the conclusion of the Group's partner funded
Sativex Phase 3 cancer pain clinical trials. This revenue stream is
expected to conclude by 30 September 2016.
-- GBP0.6 million increase in Sativex product sales revenues to
GBP3.7 million for the nine months ended 30 June 2016 compared to
GBP3.1 million for the nine months ended 30 June 2015.
Other revenue streams, individually, did not change by a
material amount.
Cost of sales
Cost of sales for the nine months ended 30 June 2016 of GBP1.9
million is consistent with the GBP1.9 million recorded in the nine
months ended 30 June 2015.
Research and development expenditure
Total research and development expenditure for the nine months
ended 30 June 2016 of GBP75.5 million increased by GBP24.2 million
compared to the GBP51.3 million incurred in the nine months ended
30 June 2015.
Partner funded research and development expenditure decreased by
GBP14.8 million to GBP3.9 million for the nine months ended 30 June
2016 from GBP18.7 million for the nine months ended 30 June 2015.
This decrease reflects the conclusion and close out of the Sativex
Phase 3 cancer pain clinical trials.
GW-funded research and development expenditure increased by
GBP39.0 million to GBP71.6 million for the nine months ended 30
June 2016 from GBP32.6 million for the nine months ended 30 June
2015. The increase is due to:
-- GBP19.4 million increase in epilepsy and other GW funded
clinical program costs - reflecting the costs associated with GW's
continuing Dravet and Lennox-Gastaut syndrome Epidiolex studies,
setting up new Phase 3 studies, costs of our other pipeline studies
and costs of providing regulatory support and Epidiolex to an
increasing number of patients under FDA-authorized expanded access
INDs.
-- GBP12.1 million increase in research and development staff
and employment-related expenses linked to increased global
headcount combined with the transition of the Group's clinical
headcount from partner funded Sativex trials to the GW funded
Epidiolex development program.
-- GBP5.4 million increase in other overheads associated with
running clinical trials such as depreciation of R&D assets,
consumables and other property-related overheads. This increase has
been impacted by the Group's refocussing of assets on GW funded
activities from partner funded projects.
-- GBP2.1 million increase in costs of growing an increased
volume of high CBD plant material for the Epidiolex development
program.
Sales, general and administrative expenses
Sales, general and administrative expenses for the nine months
ended 30 June 2016 of GBP12.5 million increased by GBP4.9 million
compared to the GBP7.6 million incurred in the nine months ended 30
June 2015. This net increase reflects:
-- A GBP3.9 million increase in payroll costs driven by
increased headcount within the Group's growing commercial
operations.
-- A GBP1.0 million increase in respect of property and travel
costs, primarily to the U.S. by staff involved in the establishment
of U.S. based operations.
-- A GBP0.5 million increase in respect of increased
accountancy, audit and investor relation costs arising from GW's
U.S. listing and Sarbanes-Oxley compliance.
-- A GBP0.5 million decrease in respect of pre-launch
commercialization costs in the U.S. These costs follow discreet
commercialization projects and the timings of these is such that a
decrease in costs is observed from the comparative period.
Net foreign exchange gains / (losses)
Net foreign exchange gains for the nine months ended 30 June
2016 was a gain of GBP19.3 million, compared to a GBP0.7 million
loss recorded for the nine months ended 30 June 2015. In both
periods the gain recognized relates to the remeasurement of the
Group's US dollar denominated cash deposits to pounds sterling at
the closing US dollar to Sterling exchange rate at 31 March. The
Sterling to U.S. dollar exchange rate has moved from 1.5127 at 30
September 2015 to 1.32993 at 30 June 2016. Dollar denominated cash
deposits totalled $274.9 million at 30 September 2015 and $204.5
million at 30 June 2016.
Taxation
The tax benefit was GBP15.0 million for the nine months ended 30
June 2016, which represents an increase of GBP8.9 million compared
to a GBP6.1 million benefit recorded in the nine months ended 30
June 2015.
In the nine months ended 30 June 2016, GW recorded a tax benefit
of GBP15.0 million comprising: (i) the recognition of an accrued
GBP13.4 million research and development tax credit expected to be
claimable by GW Research Limited in respect of the research and
development expenditure incurred in the nine months ended 30 June
2016; (ii) the recognition of an additional GBP0.6 million of
research and development tax credits in respect of the year ended
30 September 2015 in its principal research subsidiary, GW Research
Limited, as part of the process for finalising tax returns for that
period; (iii) the recognition of GBP0.3 million of research and
development federal tax credits in respect of the year ended 30
September 2015 in its U.S. subsidiary, GW Pharmaceuticals Inc.,
following the submission of an orphan drug tax credit claim and;
(iv) recording of GBP0.7 million of current tax credit in respect
of activities of GW Pharmaceuticals Inc. for the year ended 30
September 2016.
In the nine months ended 30 June 2015, GW recorded a tax benefit
of GBP6.1 million made up of: (i) the recognition of an accrued
GBP6.1 million research and development tax credit expected to be
claimable by GW Research Limited in respect of the research and
development expenditure incurred in the nine months ended 30 June
2015; (ii) the recognition of an additional GBP0.2 million of
research and development tax credits in respect of the year ended
30 September 2014 in its principal research subsidiary, GW Research
Limited, as part of the process for finalising tax returns for that
period and; (iii) recording of GBP0.2 million of deferred tax
expense due to the fact that previously recognized losses have been
utilized to offset profits earned in the nine months ended 30 June
2015 by GW Pharma Limited.
Loss
The Group reported a loss after tax for the nine months ended 30
June 2016 of GBP46.7 million compared with a loss after tax for the
nine months ended 30 June 2015 of GBP32.3 million.
Liquidity and Capital Resources
Cash Flow
Net cash outflow from operating activities for the nine months
ended 30 June 2016 of GBP57.2 million was GBP33.1 million higher
than the GBP24.1 million outflow from operating activities for the
nine months ended 30 June 2015, principally reflecting the increase
in investment in Epidiolex and other pipeline research and
development activities, an increased foreign exchange gain on the
Group's U.S. dollar denominated cash deposits and additional tax
benefits.
Capital expenditure for the nine months ended 30 June 2016 of
GBP6.3 million, consisting primarily of ongoing upgrades to our
cannabinoid extraction and Epidiolex manufacturing and growing
facilities, was GBP7.8 million lower than the GBP14.1 million for
the nine months ended 30 June 2015 due to the stage of completion
of the construction of these facilities.
Net cash flow from financing activities decreased by GBP128.2
million to a GBP0.2 million inflow in the nine months ended 30 June
2016 compared to a GBP128.4 million inflow for the nine months
ended 30 June 2015 principally reflecting a new equity fundraising
in the comparative period which resulted in a GBP127.5 million
inflow, a decrease in proceeds on share option exercise of GBP0.5
million and an increase in repayments of fit out funding by GBP0.2
million in the current period.
As at 30 June 2016, GW had a closing cash position of GBP191.2
million compared to GBP234.9 million as at 30 September 2015.
Property, plant and equipment
Property, plant and equipment at 30 June 2016 increased by
GBP9.8 million to GBP38.5 million from GBP28.7 million at 30
September 2015. This increase reflects the occupation of the
Group's new cannabinoid extraction facilities, and further
expansion growing facilities for Epidiolex production.
Inventories
Inventories at 30 June 2016 decreased by GBP0.3 million to
GBP4.5 million compared with the GBP4.8 million at 30 September
2015. Inventories consist of finished goods, consumable items and
work in progress and are stated net of a GBPnil million realizable
value provision (30 September 2015: GBP0.1 million). During the
nine months ended 30 June 2016, the provision for inventories
reduced by GBP0.1 million as a result of having utilized some of
the Group's previously provided for inventory in research and
development.
Trade receivables and other assets
Trade receivables and other receivables at 30 June 2016
increased by GBP1.0 million to GBP3.9 million from GBP2.9 million
at 30 September 2015. This is due to an increase in prepaid costs
in relation to goods, services and deposits paid for capital
expenditure not yet received by the group.
Trade and other payables
Current trade and other payables at 30 June 2016 increased by
GBP8.7 million to GBP32.7 million from GBP24.0 million at 30
September 2015. This increase reflects a GBP9.1 million increase in
trade payables and accruals as a result of the continued expansion
of GW funded clinical trials and manufacturing capability offset by
a GBP0.4 million decrease in the provision held for revenue rebates
to our commercial partners.
Non-current trade and other payables at 30 June 2016 remained
consistent at GBP8.4 million compared with GBP8.4 million at 30
September 2015.
Headcount
Average headcount for the nine months ended 30 June 2016 was 429
(30 June 2015: 313).
Guidance
The Group remains on track to meet the expenditure guidance
given with its second quarter results in May 2016, albeit that the
exchange rate gain of GBP11.2 million experienced in the third
quarter has reduced the projected net cash outflow for the 2016
financial year.
Subject to further exchange rate related volatility the Group's
fourth quarter expenditure plans remain consistent with previous
guidance.
RISKS AND UNCERTAINTIES
A detailed analysis of the risks that the Group faces is set out
in the Group's Annual Report on Form 20-F filed by the Company with
the SEC on 7 December 2015. The following summary of key risks for
the Group are as highlighted below:
Clinical
- Clinical trials for GW's product candidates are expensive,
time-consuming, uncertain and susceptible to change, delay or
termination. Even if the Company completed Phase 3 clinical trials
for a product candidate and these trials show positive results,
there can be no assurance that a regulatory authority will approve
that product candidate for any given indication.
- There is a high rate of failure for drug candidates proceeding
through clinical trials. Until GW obtains regulatory approval for a
product other than Sativex, the Company's future success will
depend heavily on the continued successful commercialization of its
only approved product, Sativex, which is currently being
commercialized for MS spasticity outside the United States.
- GW's expanded access studies are uncontrolled, carried out by
individual physician investigators independent from GW, and not
always conducted in strict compliance with Good Clinical Practices,
all of which can lead to a treatment effect which may differ from
one seen in placebo-controlled trials. Data from these studies
provide only anecdotal evidence of efficacy for regulatory review,
although they may provide supportive safety information for
regulatory review. These studies contain no control or comparator
group for reference and are not designed to be aggregated or
reported as study results. Moreover, data from such small numbers
of patients may be highly variable. Such information, including the
statistical principles that the independent physician investigators
have chosen to apply to the data, may not reliably predict data
collected via systematic evaluation of the efficacy in
company-sponsored clinical trials or evaluated via other
statistical principles that may be applied in these trials.
Reliance on such information may lead to Phase 2 and/or Phase 3
clinical trials that are not adequately designed to demonstrate
efficacy and could delay or prevent GW's ability to seek approval
of Epidiolex.
Regulatory & Legislative
- Legislative or regulatory reform, including reform of the laws
governing the use of marijuana for medicinal or recreational use,
or of the health care system, in the United States and foreign
jurisdictions may affect GW's ability to profitably sell our
products, if approved.
- If product liability lawsuits are successfully brought against
GW, the Company will incur substantial liabilities and may be
required to limit the commercialization of its product
candidates.
- GW's ability to research, develop and commercialize its
product candidates is dependent on the Company's ability to
maintain licenses relating to the cultivation, possession and
supply of controlled substances.
- Controlled substance legislation differs between countries and
legislation in certain countries may restrict GW's limit our
ability to sell Sativex and its product candidates.
- Epidiolex, Sativex and the other product candidates GW is
developing will be subject to controlled substance laws and
regulations and failure to comply with these laws and regulations,
or the cost of compliance with these laws and regulations, may
adversely affect the results of the Company's business operations,
both during clinical development and post approval, and its
financial condition.
- As a condition of approval of an NDA, the FDA may require a
Risk Evaluation and Mitigation Strategies (REMS) to ensure that the
benefits of the drug outweigh the potential risks. GW may be
required to adopt a REMS for its product candidates to ensure that
the benefits outweigh the risks of abuse, misuse, diversion and
other potential safety concerns.
- Any failure by GW to comply with existing regulations could
harm its reputation and operating results.
Orphan drug designation and intellectual property
- In respect of GW's product candidates targeting rare
indications, orphan drug exclusivity may afford limited protection,
and if another party obtains orphan drug exclusivity for the drugs
and indications GW is targeting, the Company may be precluded from
commercializing its product candidates in those indications during
that period of exclusivity. Even if GW obtains orphan drug
exclusivity for any of its product candidates this exclusivity may
afford limited protection.
o In the US orphan drug exclusivity may be lost if the FDA later
determines that the request for designation was materially
defective, or if GW is unable to assure sufficient quantity of the
drug. Moreover, a drug product with the same active moiety as that
found in GW's drug candidate may be approved by the FDA for the
same indication during the period of marketing exclusivity. The
limited circumstances include a showing that the second drug is
clinically superior to the drug with marketing exclusivity through
a demonstration of superior safety or efficacy or that it makes a
major contribution to patient care. Further if another party
obtains orphan drug exclusivity for the drugs and indications GW is
targeting, the Company may be precluded from commercializing its
product candidates in those indications during that period of
exclusivity.
o In the European Union, there is no assurance that GW will
successfully obtain orphan drug designation for future rare
indications or orphan exclusivity upon approval of any of its
product candidates that have already obtained designation. Even if
GW obtains orphan exclusivity for any product candidate, in the
European Union exclusivity period can be reduced from ten years to
six years if at the end of the fifth year it is established that
the orphan designation criteria are no longer met or if it is
demonstrated that the orphan drug is sufficiently profitable that
market exclusivity is no longer justified.
- GW may not be able to maintain and protect its proprietary
technology and assets, which could impair the Company's proprietary
cannabinoid product platform and commercial opportunities and
adversely affect its operating profits.
- If third parties claim that activities infringe upon their
intellectual property, GW's operating profits could be adversely
affected and/or the Company may be prevented from developing,
manufacturing, importing, using or commercialising some or all of
its products and product candidates in jurisdictions in which their
intellectual property subsists.
Manufacturing
- Problems with scale up of GW's manufacturing process, failure
to comply with manufacturing regulations or pass regulatory
inspections, unexpected increases in GW's manufacturing costs, or
delays in being able to ship product could harm its business,
results of operations and financial condition; as could product
recalls or inventory losses caused by unforeseen events, cold chain
interruption and testing difficulties and the like.
- Business interruptions, such as the loss of the Company's
manufacturing facilities, its growing plants, stored inventory or
laboratory facilities through fire, theft or other causes, or loss
of GW's botanical raw material due to pathogenic infection or other
causes, could have an adverse effect on the Company's ability to
meet demand for Sativex, to continue product development activities
and to conduct its business.
- GW depends on a limited number of suppliers for materials and
components required to manufacture Sativex and our other product
candidates. The loss of these suppliers, or their failure to supply
the Company on a timely basis, could cause delays in its current
and future capacity and adversely affect its business.
Marketing and Commercialization
- GW is dependent on the success of its product candidates, none
of which may receive regulatory approval or be successfully
commercialized.
- GW's product candidates, if approved, may be unable to achieve
the expected market acceptance and, consequently, limit the
Company's ability to generate revenue from new products.
- Counterfeit versions of GW's products could harm its business.
- As GW markets and commercializes its product candidates, the
Company's employees may engage in misconduct or other improper
activities, including noncompliance with regulatory standards and
requirements.
- GW expects to face intense competition, often from companies
with greater resources and experience than it has.
- Sativex, Epidiolex and GW's other product candidates contain
controlled substances, the use of which may generate public
controversy around the Company's business which could negatively
impact the commercial success of any of its approved products or
the future development of its product candidates.
- If the price for Sativex or any future approved products
decreases or if governmental and other third-party payers do not
provide adequate coverage and reimbursement levels, GW's revenue
and prospects for profitability will suffer.
- If GW is found in violation of federal or state "fraud and
abuse" laws, the Company may be required to pay a penalty and/or be
suspended from participation in federal or state health care
programs, which may adversely affect its business, financial
condition and results of operations.
Safety
- Serious adverse events or other safety risks could require GW
to abandon development and preclude, delay or limit approval of its
product candidates, or limit the scope of any approved label or
market acceptance.
Staffing and systems
- GW has recently grown its business and will need to further
increase the size and complexity of its organization in the future,
and the Company may experience difficulties in managing its growth
and executing its growth strategy.
- As GW continues to grow its business in terms of size and
complexity the Company will need to adapt and change its internal
controls and may identify material weaknesses in its internal
control over financial reporting, which could result in its
financial statements not being prepared properly.
- Failure of GW's information technology systems could
significantly disrupt the operation of its business.
Funding
- GW has significant and increasing liquidity needs and may require additional funding.
Risk in Relation to the Use of Financial Instruments
- The Group is exposed to a number of financial risks, including
credit risk, liquidity risk, market price risk and exchange rate
risk. It is the Group's policy that no speculative trading in
financial instruments shall be undertaken, and as such the Group
does not enter into contracts for complicated or compound financial
instruments.
Credit Risk
- The Group's principal financial assets are cash and short-term
cash equivalents. Risk is minimized through an investment policy
restricting the investment of surplus cash to interest bearing
deposits principally held with the major UK banking groups and with
UK subsidiaries of banking groups with acceptable credit
ratings.
- Trade receivables are concentrated to a small number of large customers with well-established relationships, where the risk and history of default is considered to be low.
Liquidity Risk
- This risk is minimized by placing surplus funds in a range of
low risk cash deposits and short-term liquid investments for
periods up to 90 days. This portfolio of deposits is managed to
ensure that a rolling programme of maturity dates is managed in
accordance with Group expenditure plans in order to ensure
available liquid cash funds when required.
Market Price Risk
- Market price risk primarily comprises interest rate exposure
risk, which is managed by maintaining a rolling programme of
varying deposit maturity dates, up to a maximum of 90 days, on a
breakable deposit basis. The majority of funds are deposited for
terms of less than 90 days. This allows the Group to react to rate
changes within a reasonable timeframe and to mitigate pricing risk
accordingly.
Exchange Rate Risk
- The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group company are expressed in Pounds Sterling.
However, during the year the Group had exposure to U.S. Dollars
("U.S.$"), Euros ("EUR") and Canadian Dollars ("CAD"). The Group's
policy is to maintain natural hedges, where possible, by matching
revenue and receipts with expenditure. The Group continues to hold
a large balance of U.S.$, to match future anticipated U.S.$
denominated expenditure on pre-launch activities and our clinical
trials for Epidiolex.
Overseas entity
- As a foreign private issuer, GW is exempt from a number of
rules under the U.S. securities laws and Nasdaq corporate
governance rules and are permitted to file less information with
the Securities and Exchange Commission than U.S. companies. This
may limit the information available to holders of the ADSs.
Conversely, GW may lose its foreign private issuer status in the
future, which could result in significant additional costs and
expenses.
GW continues to face a number of potential risks and
uncertainties which could have a material impact on the Group's
performance over the remaining three months of the financial year
and could cause actual results to differ materially from expected
and historical results.
The directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the financial information for the 9 and 3 months ended 30
June 2016.
The directors do not consider that the principal risks and
uncertainties have changed since the Annual Report on Form 20-F for
the year ended 30 September 2015 was filed by the Group with the
SEC on 7 December 2015.
Related party transactions
The Group did not enter into any significant related party
transactions during the period.
Justin Gover Adam George
Chief Executive Officer Chief Financial Officer
About GW Pharmaceuticals plc
Founded in 1998, GW is a biopharmaceutical company focused on
discovering, developing and commercializing novel therapeutics from
its proprietary cannabinoid product platform in a broad range of
disease areas. GW commercialized the world's first plant-derived
cannabinoid prescription drug, Sativex(R), which is approved for
the treatment of spasticity due to multiple sclerosis in 28
countries outside the United States. GW is advancing an orphan drug
program in the field of childhood epilepsy with a focus on
Epidiolex(R) (cannabidiol), which is in Phase 3 clinical
development for the treatment of Dravet syndrome and Lennox-Gastaut
syndrome and which is also expected to enter Phase 3 clinical
trials in the treatment of Tuberous Sclerosis Complex. GW has a
deep pipeline of additional cannabinoid product candidates which
includes compounds in Phase 1 and 2 trials for glioma,
schizophrenia and epilepsy. For further information, please visit
www.gwpharm.com.
Forward-looking statements
This news release contains forward-looking statements that
reflect GW's current expectations regarding future events,
including statements regarding financial performance, the timing of
clinical trials, the relevance of GW products commercially
available and in development, the clinical benefits of Sativex(R)
and Epidiolex(R) and the safety profile and commercial potential of
Sativex and Epidiolex. Forward-looking statements involve risks and
uncertainties. Actual events could differ materially from those
projected herein and depend on a number of factors, including
(inter alia), the success of GW's research strategies, the
applicability of the discoveries made therein, the successful and
timely completion of uncertainties related to the regulatory
process, and the acceptance of Sativex, Epidiolex and other
products by consumer and medical professionals. A further list and
description of risks and uncertainties associated with an
investment in GW can be found in GW's filings with the U.S.
Securities and Exchange Commission. Existing and prospective
investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
GW
undertakes no obligation to update or revise the information
contained in this press release, whether as a result of new
information, future events or circumstances or otherwise.
GW Pharmaceuticals plc
Condensed consolidated income statement
Three months ended 30 June 2016
30 June 30 June 30 June
Notes 2016 2016 2015
$000's GBP000's GBP000's
Revenue 2 3,097 2,329 8,629
Cost of sales (946) (711) (721)
Research and development
expenditure 3 (34,058) (25,609) (20,841)
Sales, general and administrative
expenses (7,452) (5,603) (2,984)
Net foreign exchange gain/(loss) 14,883 11,190 (8,851)
_______ _______ _______
Operating loss (24,476) (18,404) (24,768)
Interest income 130 98 46
Interest expense (24) (18) (21)
_______ _______ _______
Loss before tax (24,370) (18,324) (24,743)
Tax benefit 4 8,125 6,109 3,318
_______ _______ _______
Loss for the period (16,245) (12,215) (21,425)
_______ _______ _______
Loss per share - basic
and diluted 5 (6.1c) (4.6p) (8.5p)
All activities relate to continuing operations.
Condensed consolidated statement of comprehensive loss
For the three months ended 30 June 2016
30 June 30 June
2016 2015
GBP000's GBP000's
-------------------------------------------- --------- ---------
Loss for the period (12,215) (21,425)
Items that may be reclassified subsequently
to profit or loss
Exchange gain on retranslation of
foreign operations 266 16
Other comprehensive gain for the period 266 16
-------------------------------------------- --------- ---------
Total comprehensive loss for the period (11,949) (21,409)
-------------------------------------------- --------- ---------
GW Pharmaceuticals plc
Condensed consolidated income statement
Nine months ended 30 June 2016
30 June 30 June 30 June
Notes 2016 2016 2015
$000's GBP000's GBP000's
Revenue 2 11,497 8,645 22,945
Cost of sales (2,580) (1,940) (1,935)
Research and development
expenditure 3 (100,406) (75,497) (51,328)
Sales, general and administrative
expenses (16,584) (12,470) (7,581)
Net foreign exchange gain/(loss) 25,640 19,279 (672)
_______ _______ _______
Operating loss (82,433) (61,983) (38,571)
Interest income 388 292 161
Interest expense (70) (53) (60)
_______ _______ _______
Loss before tax (82,115) (61,744) (38,470)
Tax benefit 4 19,942 14,995 6,140
_______ _______ _______
Loss for the period (62,173) (46,749) (32,330)
_______ _______ _______
Loss per share - basic
and diluted 5 (23.7c) (17.8p) (13.4p)
All activities relate to continuing operations.
Condensed consolidated statement of comprehensive loss
For the nine months ended 30 June 2016
30 June 30 June
2016 2015
GBP000's GBP000's
-------------------------------------------- --------- ----------
Loss for the period (46,749) (32,330)
Items that may be reclassified subsequently
to profit or loss
Exchange gain/(loss) on retranslation
of foreign operations 166 (20)
Other comprehensive gain/(loss) for
the period 166 (20)
-------------------------------------------- --------- ----------
Total comprehensive loss for the period (46,583) (32,350)
-------------------------------------------- --------- ----------
GW Pharmaceuticals plc
Condensed consolidated statement of changes in equity
Nine months ended 30 June 2016
Share
Share premium Other Accumulated
capital account reserves deficit Total
GBP000's GBP000's GBP000's GBP000's GBP000's
Balance at 1 October
2014 237 220,551 19,260 (81,464) 158,584
Issue of share capital 22 127,812 - - 127,834
Expense of new equity
issue - (307) - - (307)
Exercise of share
options 2 1,139 - - 1,141
Share-based payment
transactions - - - 1,161 1,161
Loss for the period - - - (32,330) (32,330)
Other comprehensive
loss - - (20) - (20)
_________ _________ ________ __________ ________
Balance at 30 June
2015 261 349,195 19,240 (112,633) 256,063
_________ _________ ________ __________ ________
Balance at 1 October
2015 261 349,275 19,189 (123,455) 245,270
Exercise of share
options 2 633 - - 635
Share-based payment
transactions - - - 5,900 5,900
Loss for the period - - - (46,749) (46,749)
Deferred tax attributable
to unrealized share
option gains - - - 366 366
Other comprehensive
gain - - 166 - 166
_________ _________ ________ __________ ________
Balance at 30 June
2016 263 349,908 19,355 (163,938) 205,588
_________ _________ ________ __________ ________
GW Pharmaceuticals plc
Condensed consolidated balance sheets
As at 30 June 2016
As at As at As at
30 June 30 June 30 September
Notes 2016 2016 2015
Non-current assets $000's GBP000's GBP000's
Goodwill 6,929 5,210 5,210
Other intangible assets 749 563 245
Property, plant and equipment 51,266 38,548 28,733
Deferred tax asset 2,506 1,884 418
_________ __________ __________
61,450 46,205 34,606
_________ __________ __________
Current assets
Inventories 6 5,955 4,478 4,756
Taxation recoverable 18,912 14,220 12,641
Trade receivables and other
assets 7 5,204 3,913 2,873
Cash and cash equivalents 254,252 191,177 234,872
_________ __________ __________
284,323 213,788 255,142
_________ __________ __________
Total assets 345,773 259,993 289,748
_________ __________ __________
Current liabilities
Trade and other payables 8 (43,514) (32,719) (24,022)
Current tax liabilities - - (366)
Obligations under finance
leases 10 (153) (115) (111)
Deferred revenue 9 (3,028) (2,277) (3,269)
_________ __________ __________
(46,695) (35,111) (27,768)
Non-current liabilities
Trade and other payables 8 (11,211) (8,430) (8,445)
Obligations under finance
leases 10 (6,658) (5,006) (1,540)
Deferred revenue 9 (7,791) (5,858) (6,725)
_________ __________ __________
Total liabilities (72,355) (54,405) (44,478)
_________ __________ __________
Net assets 273,418 205,588 245,270
_________ __________ __________
Equity
Share capital 350 263 261
Share premium account 465,353 349,908 349,275
Other reserves 25,741 19,355 19,189
Accumulated deficit (218,026) (163,938) (123,455)
_________ __________ __________
Total equity 273,418 205,588 245,270
_________ __________ __________
---------
GW Pharmaceuticals plc
Condensed consolidated cash flow statements
For the nine months ended 30 June 2016
Nine months ended Nine months ended Nine months ended
30 June 30 June 30 June
2016 2016 2015
$000's GBP000's GBP000's
Loss for the period (62,173) (46,749) (32,330)
Adjustments for:
Interest income (388) (292) (161)
Interest expense 70 53 60
Tax benefit (19,942) (14,995) (6,140)
Depreciation of property, plant and equipment 3,359 2,526 1,670
Amortization of intangible assets 56 42 2
Net foreign exchange (gains)/losses (25,777) (19,382) 672
(Decrease)/increase in provision for inventories (60) (45) 13
Profit on disposal of property, plant and equipment - - (1)
Share-based payment charge 7,847 5,900 1,166
__________ __________ __________
(97,008) (72,942) (35,049)
Decrease in inventories 430 323 -
Decrease/(Increase) in trade receivables and other assets 76 57 (171)
Increase in trade and other payables and deferred revenue 4,354 3,274 5,715
__________ __________ __________
Cash used in operations (92,148) (69,288) (29,505)
Income taxes paid (1,529) (1,150) -
Research and development tax credits received 17,663 13,281 5,415
__________ __________ __________
Net cash outflow from operating activities (76,014) (57,157) (24,090)
__________ __________ __________
Investing activities
Interest received 386 290 154
Purchases of property, plant and equipment (8,319) (6,255) (14,136)
Purchase of intangible assets (483) (363) (59)
Proceeds from sales of property, plant and equipment - - 2
__________ __________ __________
Net cash outflow from investing activities (8,416) (6,328) (14,039)
__________ __________ __________
Financing activities
Proceeds on exercise of share options 845 635 1,141
Proceeds of new equity issue - - 127,834
Expenses of new equity issue - - (307)
Interest paid (70) (53) (63)
Repayment of fit out funding (319) (240) -
Capital element of finance leases (130) (98) (228)
__________ __________ __________
Net cash inflow from financing activities 326 244 128,377
__________ __________ __________
Effect of foreign exchange rate changes on cash and cash
equivalents 25,993 19,546 (691)
__________ __________ __________
Net (decrease)/increase in cash and cash equivalents (58,111) (43,695) 89,557
Cash and cash equivalents at beginning of the period 312,363 234,872 164,491
__________ __________ __________
Cash and cash equivalents at end of the period 254,252 191,177 254,048
__________ __________ __________
-----------------
GW Pharmaceuticals plc
Notes to the condensed consolidated financial statements
Three and nine months ended 30 June 2016
1. Significant accounting policies
Basis of preparation
These unaudited condensed consolidated interim financial
statements for the three and nine month periods ended 30 June 2016
and 30 June 2015 of GW Pharmaceuticals plc and subsidiaries
(collectively, the "Group") have been prepared in accordance with
International Accounting Standard 34 - "Interim Financial
Reporting" ("IAS 34"), as issued by the International Accounting
Standards Board ("IASB") and as endorsed by the European Union.
These statements were approved by the Board on 9 August 2016.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with International
Financial Reporting Standards ("IFRS") as issued by the IASB and as
adopted by the European Union have been condensed or omitted as
permitted by IAS 34. The balance sheet as at 30 September 2015 was
derived from the audited financial statements.
The significant accounting policies and methods of computation
adopted in the preparation of these condensed consolidated interim
financial statements are consistent with those used in the
preparation of the Group's annual audited financial statements for
the year ended 30 September 2015 in accordance with IFRS, as issued
by the IASB and as adopted by the European Union. These condensed
consolidated interim financial statements include all adjustments
necessary to fairly state the results of the interim period and the
Group believes that the disclosures are adequate to make the
information presented not misleading. Interim results are not
necessarily indicative of results to be expected for the full
year.
The Group has not adopted early any standard, interpretation or
amendment that was issued but is not yet effective.
The information for the period ended 30 September 2015 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006.
Solely for the convenience of the reader, unless otherwise
indicated, all pound sterling amounts stated in the Condensed
Consolidated Balance Sheet as at 30 June 2016, the Condensed
Consolidated Income Statement and the Condensed Consolidated Cash
Flow Statement for the three and nine months ended 30 June 2016
have been translated into U.S. dollars at the rate on 30 June 2016
of $1.32993 to GBP1.0000. These translations should not be
considered representations that any such amounts have been, could
have been or could be converted into U.S. dollars at that or any
other exchange rate as at that or any other date.
The Directors do not consider the business to be seasonal or
cyclical.
Going concern
At 30 June 2016 the Group had cash and cash equivalents of
GBP191.2 million. The Directors have considered the financial
position of the Group, its cash position and forecast cash flows
for the 12-month period from the date of this report when
considering going concern. They have also considered the Group's
key risks and uncertainties affecting the likely development of the
business, and the subsequent completion in July 2016 of a follow-on
offering, raising total net proceeds after expenses of $273.1
million (GBP206.4 million). In the light of this review, the
Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for at least a 12-month period from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing these financial statements.
2. Segmental Information
Operating Segments
Information reported to the Company's Board of Directors, the
chief operating decision maker for the Group, for the purposes of
resource allocation and assessment of segment performance is
focused on the stage of product development. The Group's reportable
segments are as follows:
-- Commercial: The Commercial segment distributes and sells the
Group's commercial products. Currently Sativex is promoted through
strategic collaborations with major pharmaceutical companies for
the currently approved indication of spasticity due to MS. The
commercial segment will include revenues from the direct marketing
of other future approved commercial products. The Group has
licensing agreements for the commercialization of Sativex with
Almirall S.A. in Europe (excluding the United Kingdom) and Mexico,
Otsuka Pharmaceutical Co. Ltd. ("Otsuka") in the U.S., Novartis
Pharma AG in Australia, New Zealand, Asia (excluding Japan, China
and Hong Kong), the Middle East and Africa, Bayer HealthCare AG in
the United Kingdom and Canada, Neopharm Group in Israel and Ipsen
Biopharm Ltd. in Latin America (excluding Mexico and the Islands of
the Caribbean). Commercial segment revenues include product sales,
royalties, license, collaboration, and technical access fees, and
development and approval milestone fees.
-- Sativex Research and Development: The Sativex Research and
Development ("Sativex R&D") segment seeks to maximise the
potential of Sativex through the development of new indications.
The focus during the period for this segment was the Phase 3
clinical development programme of Sativex for use in the treatment
of cancer pain. In addition, Sativex has shown promising efficacy
in Phase 2 trials in other indications such as neuropathic pain,
but these areas are not currently the subject of full development
programmes. Sativex Research and Development segment revenues
consist of research and development fees charged to Sativex
licensees.
-- Pipeline Research and Development: The Pipeline Research and
Development ("Pipeline R&D") segment seeks to develop
cannabinoid medications other than Sativex across a range of
therapeutic areas using the Group's proprietary cannabinoid
technology platform. The Group's product pipeline includes
Epidiolex(R), a treatment for Dravet syndrome and Lennox-Gastaut
syndrome, a second epilepsy product candidate as well as other
product candidates in Phase 1 and 2 clinical development for
glioma, adult epilepsy and schizophrenia. Pipeline Research and
Development segment revenues consist of research and development
fees charged to Otsuka under the terms of our pipeline research
collaboration agreement.
The accounting policies of the reportable segments are
consistent with the Group's accounting policies. Segment result
represents the result of each segment without allocation of
share-based payment expenses, and before sales, general and
administrative expenses, foreign exchange gain/loss, interest
expense, interest income and tax.
No measures of segment assets and segment liabilities are
reported to the Group's Board of Directors in order to assess
performance and allocate resources. There is no intersegment
activity and all revenue is generated from external customers.
2. Segmental Information (continued)
Segmental revenues and results
For the Three Months Ended 30 June 2016
Total
Sativex Pipeline reportable Unallocated Consolidated
Commercial R&D R&D segments costs(1)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue:
Product sales 1,522 - - 1,522 - 1,522
Research and development
fees - 357 62 419 - 419
License, collaboration
and technical access
fees 290 - - 290 - 290
Development and approval
milestones 98 - - 98 - 98
Total revenue 1,910 357 62 2,329 - 2,329
Cost of sales (711) - - (711) - (711)
Research and development
expenditure - (426) (24,408) (24,834) (775) (25,609)
---------- -------- -------- ----------- ------------- ------------
Segmental result 1,199 (69) (24,346) (23,216) (775) (23,991)
---------- -------- -------- ----------- ------------- ------------
Sales, general and
administrative expenses (5,603)
Net foreign exchange
gain 11,190
Operating loss (18,404)
Interest income 98
Interest expense (18)
Loss before tax (18,324)
Tax benefit 6,109
------------
Loss for the period (12,215)
------------
1 Unallocated costs represent the portion of share-based payment
expenditures which is included in research and development
expenditure, but which is not allocated to segments. The remaining
share-based payment expenditure is included within sales, general
and administrative expenses, which is similarly excluded from
segmental result.
2. Segmental Information (continued)
Segmental revenues and results
For the Three Months Ended 30 June 2015
Total
Sativex Pipeline reportable Unallocated Consolidated
Commercial R&D R&D segments costs(1)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue:
Product sales 1,152 - - 1,152 - 1,152
Research and development
fees - 6,984 202 7,186 - 7,186
License, collaboration
and technical access
fees 291 - - 291 - 291
Total revenue 1,443 6,984 202 8,629 - 8,629
Cost of sales (721) - - (721) - (721)
Research and development
expenditure - (7,957) (12,618) (20,575) (266) (20,841)
---------- -------- -------- ----------- ------------- ------------
Segmental result 722 (973) (12,416) (12,667) (266) (12,933)
---------- -------- -------- ----------- ------------- ------------
Sales, general and
administrative expenses (2,984)
Net foreign exchange
loss (8,851)
Operating loss (24,768)
Interest income 46
Interest expense (21)
------------
Loss before tax (24,743)
Tax benefit 3,318
------------
Loss for the period (21,425)
------------
1 Unallocated costs represent the portion of share-based payment
expenditures which is included in research and development
expenditure, but which is not allocated to segments. The remaining
share-based payment expenditure is included within sales, general
and administrative expenses, which is similarly excluded from
segmental result.
2. Segmental Information (continued)
Segmental revenues and results
For the Nine Months Ended 30 June 2016
Total
Sativex Pipeline reportable Unallocated Consolidated
Commercial R&D R&D segments costs(1)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue:
Product sales 3,719 - - 3,719 - 3,719
Research and development
fees - 3,698 247 3,945 - 3,945
License, collaboration
and technical access
fees 883 - - 883 - 883
Development and approval
milestones 98 - - 98 - 98
Total revenue 4,700 3,698 247 8,645 - 8,645
Cost of sales (1,940) - - (1,940) - (1,940)
Research and development
expenditure - (4,487) (69,239) (73,726) (1,771) (75,497)
---------- -------- -------- ----------- ------------- ------------
Segmental result 2,760 (789) (68,992) (67,021) (1,771) (68,792)
---------- -------- -------- ----------- ------------- ------------
Sales, general and
administrative expenses (12,470)
Net foreign exchange
gain 19,279
Operating loss (61,983)
Interest income 292
Interest expense (53)
Loss before tax (61,744)
Tax benefit 14,995
------------
Loss for the period (46,749)
------------
1 Unallocated costs represent the portion of share-based payment
expenditures which is included in research and development
expenditure, but which is not allocated to segments. The remaining
share-based payment expenditure is included within sales, general
and administrative expenses, which is similarly excluded from
segmental result.
2. Segmental Information (continued)
Segmental revenues and results
For the Nine Months Ended 30 June 2015
Total
Sativex Pipeline reportable Unallocated Consolidated
Commercial R&D R&D segments costs(1)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue:
Product sales 3,111 - - 3,111 - 3,111
Research and development
fees - 18,303 436 18,739 - 18,739
License, collaboration
and technical access
fees 998 - - 998 - 998
Development and approval
milestones 97 - - 97 - 97
Total revenue 4,206 18,303 436 22,945 - 22,945
Cost of sales (1,935) - - (1,935) - (1,935)
Research and development
expenditure (12) (21,343) (29,031) (50,386) (942) (51,328)
---------- -------- -------- ----------- ------------- ------------
Segmental result 2,259 (3,040) (28,595) (29,376) (942) (30,318)
---------- -------- -------- ----------- ------------- ------------
Sales, general and
administrative expenses (7,581)
Net foreign exchange
loss (672)
Operating loss (38,571)
Interest income 161
Interest expense (60)
Loss before tax (38,470)
Tax benefit 6,140
------------
Loss for the period (32,330)
------------
1 Unallocated costs represent the portion of share-based payment
expenditures which is included in research and development
expenditure, but which is not allocated to segments. The remaining
share-based payment expenditure is included within sales, general
and administrative expenses, which is similarly excluded from
segmental result.
2. Segmental Information (continued)
Revenues from the Group's largest customer are included within
the above segments as follows:
Sativex Pipeline
Commercial R&D R&D Total
GBP'000 GBP000's GBP000's GBP000's
Three months ended 30 June
2016 70 356 62 488
________ _________ _______ ________
Three months ended 30 June
2015 70 6,984 202 7,256
________ _________ _______ ________
Nine months ended 30 June 2016 210 3,698 247 4,155
________ _________ _______ ________
Nine months ended 30 June 2015 210 18,303 439 18,952
________ _________ _______ ________
Revenues from the Group's second largest customer, the only
other customer where revenues account for more than 10% of the
Group's revenues, are included within the above segments as
follows:
Sativex Pipeline
Commercial R&D R&D Total
GBP'000 GBP000's GBP000's GBP000's
Three months ended 30 June 2016 1,280 - - 1,280
________ _________ _______ ________
Three months ended 30 June 2015 994 - - 994
________ _________ _______ ________
Nine months ended 30 June 2016 3,066 - - 3,066
________ _________ _______ ________
Nine months ended 30 June 2015 2,443 - - 2,443
________ _________ _______ ________
Geographical analysis of turnover by destination of customer
Three Three Nine Nine
months months months months
ended ended ended ended
30 June 30 June 30 June 30 June
2016 2015 2016 2015
GBP000's GBP000's GBP000's GBP000's
UK 361 190 827 818
Europe (excluding UK) 1,295 1,010 3,176 2,632
United States 426 7,055 3,908 18,513
Canada 184 173 488 543
Asia 63 201 246 439
__________ __________ __________ __________
2,329 8,629 8,645 22,945
__________ __________ __________ __________
3. Research and development expenditure
Three months Three Nine Nine
ended months months months
ended ended ended
30 June 30 June 30 June 30 June
2016 2015 2016 2015
GBP000's GBP000's GBP000's GBP000's
GW-funded research and
development 25,190 13,655 71,552 32,589
Development partner-funded
research and development 419 7,186 3,945 18,739
__________ __________ __________ __________
Total 25,609 20,841 75,497 51,328
__________ __________ __________ __________
4. Tax benefit
Three Three Nine
months months Nine months months
ended ended ended ended
30 June 30 June 30 June 30 June
2016 2015 2016 2015
GBP000's GBP000's GBP000's GBP000's
Current period research
and development tax credit (4,774) (3,429) (13,361) (6,157)
Adjustments in respect
of prior year tax credit (349) - (940) (163)
Current period tax credit (986) - (694) -
Current period utilization
of deferred tax assets - 111 - 180
__________ __________ __________ _________
Total credit for the period (6,109) (3,318) (14,995) (6,140)
__________ __________ __________ _________
The research and development tax credit relates to research and
development expenditure claimed under the Finance Act 2000 in the
UK, or claimed under the orphan credit scheme in the United States.
In April 2016, the Group received GBP13.3 million in respect of
research and development expenditure incurred in the UK for the
year ended 30 September 2015.
In the three and nine months ended 30 June 2016 and 2015, the
Group recognized the full estimated benefit for qualifying research
and development expenditures incurred during each period. Any
difference in the credit ultimately received is recorded as an
adjustment in respect of prior year.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and amended to the extent that sufficient future
taxable profits will be available to allow all or part of the asset
to be recovered.
5. Loss per share
The calculations of loss per share are based on the following
results and numbers of shares.
Three months Three Nine months Nine months
ended months ended ended
ended
30 June 30 June 30 June 30 June
2016 2015 2016 2015
GBP000's GBP000's GBP000's GBP000's
Loss for the period
- basic and diluted (12,215) (21,425) (46,749) (32,330)
___________ ___________ ___________ ___________
Number of shares
Three months Three Nine months Nine months
ended months ended ended
ended
30 June 30 June 30 June 30 June
2016 2015 2016 2015
Million Million Million Million
Weighted average number
of ordinary shares 262.9 250.7 262.3 241.5
Less: ESOP trust ordinary - - - -
shares(1)
___________ ___________ ___________ ___________
Weighted average number
of ordinary shares
for purposes of basic
earnings per share 262.9 250.7 262.3 241.5
Effect of potentially - - - -
dilutive shares arising
from share options
and warrants(2)
___________ ___________ ___________ ___________
Weighted average number
of ordinary shares
for purposes of diluted
earnings per share 262.9 250.7 262.3 241.5
___________ ___________ ___________ ___________
Loss per share-basic (4.6p) (8.5p) (17.8p) (13.4p)
Loss per share-diluted (4.6p) (8.5p) (17.8p) (13.4p)
(1) As at 30 June 2016, 33,054 ordinary shares were held in the
ESOP trust (30 June 2015: 34,706). The effect is less than 0.1
million ordinary shares for each of the three and nine month
periods ended 30 June 2016, and consequently these have not been
presented above.
(2) The impact of 7.2 million and 6.4 million antidilutive share
options have been excluded from the diluted loss per share
calculation for the three and nine months ended 30 June 2016 (6.2
million and 6.0 million antidilutive share options and warrants for
the three and nine months ended 30 June 2015).
6. Inventories
30 June 30 September
2016 2015
GBP000's GBP000's
Raw materials 265 317
Work in progress 3,430 3,686
Finished goods 783 753
__________ __________
4,478 4,756
__________ __________
Inventory is stated net of a provision for inventories,
calculated in accordance with the Group's accounting policy. The
movement in the provision for inventories is as follows:
GBP000's
Opening balance - as at 1 October
2014 351
Write-down of inventories 79
Write off of inventories included
in the provision (316)
Reversal of write-down of inventories (66)
__________
Closing balance as at 30 June 2015 48
__________
Opening balance - as at 1 October
2015 66
Write-down of inventories 30
Write off of inventories included
in the provision (19)
Reversal of write-down of inventories (56)
__________
Closing balance as at 30 June 2016 21
__________
The reversal of write-down of inventories is as a result of an
increased level of utilization, reducing the level of work in
progress expected to expire before use.
Inventories with a carrying value of GBP2.1 million are
considered to be recoverable after more than one year from the
condensed consolidated balance sheet date, but within the Group's
normal operating cycle (30 September 2015: GBP2.7 million).
7. Trade receivables and other receivables
30 June 30 September
2016 2015
GBP000's GBP000's
Amounts falling due within
one year
Trade receivables 335 373
Other receivables 1,248 956
Prepayments and accrued income 2,330 1,544
__________ __________
3,913 2,873
__________ __________
8. Trade and other payables
30 June 30 September
2016 2015
GBP000's GBP000's
Amounts falling due within one
year
Other creditors and accruals 13,759 10,714
Clinical trial accruals 12,699 8,374
Trade payables 4,878 3,795
Fit out funding 597 348
Other taxation and social security 786 791
__________ __________
32,719 24,022
__________ __________
Amounts falling due after one
year
Fit out funding 8,430 8,445
__________ __________
41,149 32,467
__________ __________
Fit out funding represents GBP9.0 million (30 September 2015:
GBP8.8 million) owed to the Group's landlord reflecting the
liability to repay the GBP7.8 million of fit out funding received
to fund the expansion and upgrades to manufacturing facilities and
associated accrued interest of GBP1.4 million (30 September 2015:
GBP1.0 million), net of payments to date of GBP0.2 million. The
repayments of this liability commenced on 27 May 2016 after the
Group commenced occupying the facility. Repayments will continue
over a 15-year term.
Other creditors and accruals includes GBP3.7 million of accrued
capital expenditure (30 September 2015: GBP1.2 million).
9. Deferred revenue
30 June 30 September
2016 2015
GBP000's GBP000's
Amounts falling due within one
year
Deferred license, collaboration
and technical access fee income 1,239 1,260
Advance research and development
fees 1,038 2,009
__________ __________
2,277 3,269
__________ __________
Amounts falling due after one
year
Deferred license, collaboration
and technical access fee income 5,858 6,725
__________ __________
Deferred revenues result mainly from the unamortized portion of
up-front license fees received in 2005 of GBP12.0 million from
Almirall S.A. and collaboration and technical access fees from
other Sativex licensees.
Advance research and development fees represent amounts received
from Otsuka for activities to be carried out on behalf of Otsuka.
These amounts will be recognized as revenue in future periods as
the services are rendered.
10. Amounts payable under finance leases
Minimum lease payments
30 June 30 September
2016 2015
GBP000's GBP000's
Amounts payable under finance
leases:
Within one year 476 176
In the second to fifth years
inclusive 2,223 703
After five years 6,650 1,206
__________ __________
9,349 2,085
Less: future finance charges (4,228) (434)
__________ __________
Present value of lease obligations 5,121 1,651
__________ __________
Present value of
minimum lease payments
30 June 30 September
2016 2015
GBP000's GBP000's
Amounts payable under finance
leases:
Amounts due for settlement
within 12 months 115 111
Amounts due for settlement
after 12 months 5,006 1,540
__________ __________
5,121 1,651
__________ __________
As at 30 June 2016, the weighted average lease term remaining is
17.3 years (30 September 2015: 12.1 years). All lease obligations
are denominated in sterling.
On 27 May 2016, the Group signed the lease for its new
cannabinoid extraction facility. On that date balances relating to
a finance lease liability and a fixed asset were recognised.
Repayments will continue over a 20-year lease term.
11. Contingent liability
As at 30 June 2016 certain fees associated with capital
expenditure have been estimated. The final fees payable are
expected to be agreed in the first quarter of the year ending 30
September 2017. The Group estimates that there is a possible
contingent liability for incremental fees of up to GBP0.4 million
(30 September 2015: GBP0.4 million) of capital expenditure.
12. Subsequent events
On 18 July 2016 the Group successfully completed an equity
financing by issuing 38.6 million ordinary shares in the form of
ADSs listed on the Nasdaq Global market, raising expected net
proceeds after expenses of $273.1 million (GBP206.4 million). The
proceeds are expected to be used to support pre-launch
commercialization activities for Epidiolex, further expansion of
our Epidiolex manufacturing capability to meet anticipated medium
and long-term demand, manufacture of Epidiolex inventory in
preparation for launch, expansion of the market opportunity for
Epidiolex through clinical development of other orphan indications,
advancement of other pipeline opportunities; and other general
corporate purposes, including working capital.
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRTDMGGRGLGGVZM
(END) Dow Jones Newswires
August 09, 2016 07:00 ET (11:00 GMT)
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