Jazz Pharmaceuticals JAZZ -2.98% PLC has agreed to acquire GW Pharmaceuticals GWPH 46.29% PLC, maker of the first epilepsy drug derived from the marijuana plant, for $6.7 billion in cash and stock.
The deal, combining two neuroscience drugmakers, marks a bet by Jazz on the long-term prospects for cannabis-based therapies.
GW Pharmaceuticals’ drug Epidiolex is used to treat rare forms of epilepsy and had global sales of $510 million last year, the companies said Wednesday. U.K.-based GW launched the drug in 2018 at a price of about $32,500 per patient annually in the U.S.
The deal will strengthen Jazz’s neuroscience drug pipeline and add a potential blockbuster product in Epidiolex, which has the near-term potential to reach $1 billion in global annual sales, Jazz Chief Executive Bruce Cozadd said in an interview.
GW’s pipeline includes cannabinoid-based drugs being tested as treatments for autism, schizophrenia and other conditions.
“We saw an opportunity to add near-term what we think is a blockbuster product in Epidiolex, as well as bring in a pipeline engineered around cannabinoids in neuroscience,” Mr. Cozadd said.
Jazz has long had a research interest in cannabinoid drugs and see the class growing in years to come, Mr. Cozadd said.
“Scientists worldwide are starting to understand the potential application in multiple diseases,” Mr. Cozadd said. “GW has really been pioneering this field.”
Under the terms, holders of GW’s American depositary shares will receive $220 per share, a 50% premium to GW’s share price as of Tuesday. The purchase price includes $200 per share in cash and $20 in Jazz stock.
The companies said they expect the deal to close in the second quarter.
Dublin-based Jazz is a maker of rare-disease drugs with sales of $1.7 billion through the third quarter of 2020, up 7.5% from the same period in 2019. Its top-selling drug, Xyrem, treats narcolepsy.
Jazz shares fell 5.1% Wednesday, driven by concerns Jazz is paying too rich of a premium relative to analysts’ estimates for GW’s future financial performance, said Ami Fadia, an SVB Leerink LLC analyst, in a note to investors.
“We believe the deal is an interesting strategic fit with Jazz’s neuroscience focus and adds a platform of innovative cannabinoid product candidates along with a highly specialized manufacturing expertise,” wrote Ms. Fadia.
GW shares rose 46.2% to $213.92; the stock is up 85.3% over the past 12 months.
Write to Joseph Walker at [email protected]
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