GW Pharmaceuticals: Sativex's Efficacy Could Move the Dial

Results of a ‘real-world’ study and an independent economic analysis confirm that Sativex is an efficacious and cost-effective therapy for MS spasticity. We see potential for GW Pharma’s (GWP.L) licensing partners (Almirall, Bayer, Novartis) to use these data in their ongoing pricing/reimbursement discussions and marketing efforts. Moreover, the study findings provide greater confidence in our peak sales forecast for Sativex in MS spasticity of £64m.

Sativex is effective in real-life setting…
Positive findings from a German real-world study of Sativex for multiple sclerosis spasticity (MSS) have been presented at leading MS conference, ECTRIMS. Results of the 300-patient, observational MOVE 2 trial showed that use of Sativex under reallife conditions can effectively relieve moderate-to-severe MSS (the drug’s approved indication). Sativex provided initial relief in 75% of previously resistant patients, with 41% reporting a clinically relevant (≥30%) reduction in spasticity after three months, mirroring the results of pivotal registration studies. As such, we see potential for GW Pharma’s licensing partners (Almirall, Bayer, Novartis) to use the MOVE 2 data to support ongoing pricing/reimbursement discussions and marketing efforts.

…and is also cost effective
Complementing this real-world data, an independent pharmacoeconomic analysis has concluded that Sativex is cost effective for MSS in Germany and Spain (Slof et al, 2012). The costs and quality-adjusted life years (QALY, a measure of quality and quantity of life) associated with current spasticity management were compared to Sativex. Results showed Sativex was cost effective over a five-year period in both countries, with low incremental costs and QALY gains compared to standard treatments. This was seen because reduced spasticity in MS patients led to lower consumption of healthcare resources (physiotherapy, medications).

Valuation: DCF-based valuation of £200m
While the real-world data and cost-effectiveness analysis have no immediate impact on our valuation or forecasts, they provide further support for our peak sales forecast for Sativex in MS spasticity of £64m. Greater than expected market share/growth and new indications for Sativex, clinical progress in cancer pain or developments with Otsuka (a second US Sativex indication or licensing deal on CNS/cancer candidates from the research collaboration) represent upside to our base-case valuation.

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