[Corrected 8/27/19, 1:18 p.m. PT. See below.] Remember the simpler times of the mid-2010s, when you could order a latte or cocktail in California without the option of adding CBD?
For Justin Gover, CEO of British drugmaker GW Pharmaceuticals (NASDAQ: [[ticker:GWPH]]), society’s sudden embrace of cannabidiol (CBD), the other active ingredient found in the cannabis plant, is a trip—though CBD won’t make you trip. That’s caused by THC, or tetrahydrocannabinol, the cannabis component responsible for most of marijuana’s psychoactive effects.
Businesses have been rapidly been building up around marijuana since states began legalizing its recreational use in 2012. More recently, CBD has been gaining in popularity as a potential treatment for health issues from seizures to inflammation, with businesses like GW cashing in. One study projected sales for the CBD market to reach $20 billion by 2024.
Founded in 1998 to develop medications from marijuana, GW is based in Cambridge, UK. In 2015, Gover relocated to California to open operations in the US. GW’s US subsidiary, called Greenwich Biosciences, is in Carlsbad, a city in North San Diego County. Today it houses more than 120 employees, or about 15 percent of the company’s 800-plus-person workforce. [Paragraph corrects founding year.]
Historically, financing cannabis companies has been difficult; US federal regulations treat marijuana as a controlled substance. But now investors are looking to cash in on the growing legal marijuana market. Earlier this month, Silver Spike Acquisition (NASDAQ: [[ticker:SSKU]])—the third so-called blank-check company to launch this year targeting the cannabis industry—raised $250 million in an initial public offering, according to IPO research firm Renaissance Capital. Such companies, which have no operations, raise money from investors in an IPO and use the money to make acquisitions.
On the biotech side of the industry, it was only last summer that the FDA approved the first drug made from an active ingredient derived from marijuana: GW’s cannabidiol (Epidiolex), a treatment for seizures associated with two rare forms of epilepsy.
Many other CBD products are sold, both in retail stores and online, without similar regulatory oversight. While various benefits of CBD’s use have been reported, health officials and regulators have called for doctors and patients to learn more about use of the compound. GW is one of the few companies to study it extensively with three clinical trials that involved 516 patients, which helped lead to FDA approval.
Gover, who has led the company in raising more than $1 billion to fuel its growth over the past two decades, reflected last week on the company’s history, and the societal and regulatory changes that have taken place since it launched, at an event organized by the UK Department for International Trade and Biocom, the life sciences trade organization.
Here are five insights from the event, which took place at the Alexandria at Torrey Pines and featured Gover in a conversation with Biocom president and CEO Joe Panetta.
—Without patient advocates and the UK government’s acquiescence, GW may never have gotten off the ground.
“There started to emerge, at least in the UK, a significant patient voice—and, I’d say, particularly from the multiple sclerosis community—talking about uses of cannabis for symptom relief. … The British government, at the time, didn’t want to be ‘soft’ on marijuana, didn’t want to be seen to be legalizing cannabis. On the other hand, they were actually very supportive of the idea of doing real research,” Gover said.
GW spoke with the UK’s equivalent of the DEA and secured licenses to begin research, which began with an effort to standardize plant-based products and understanding the emerging pharmacology of the cannabis plant, he said.
—More than a decade after its founding, GW’s first drug, nabiximols (Sativex), the first approved cannabis-based drug in the world, was OK’d in the UK as a treatment for spasticity, a common symptom of multiple sclerosis—but the company was struggling.
“It was very hard to raise money … Regulators were very skeptical; I would say the medical community was largely very skeptical as well,” Gover said. But in 2012 there came a sea change, spurred by the family of Sam Vogelstein, a boy who has epilepsy, when they reached out to the company to learn more about its early research into CBD. (Read more about Vogelstein here.)
“They, like many families that have children with refractory epilepsy, had tried and failed multiple therapies and had started to pursue nonpharmaceutical options,” Gover said.
“At that point in time, in California, CBD preparations and oils were starting to become available, and they’d had some mixed success,” he said. “Sam had been given some CBD oils and had seen some pretty dramatic reductions in seizures and yet there were other CBD oil preparations where the seizures had not had any reduction or indeed got worse. The family was really hopeful and yet frustrated at the same time about this.”
Vogelstein and his family flew to the UK and the boy took a CBD preparation GW formulated for him. The day he arrived he had 68 seizures. Weeks later, the day he flew home, he had none, Gover said. This anecdotal show of the potential of the chemical compound accelerated the research underway at GW, which, eventually, led to Epidiolex’s 2018 approval in the US, Gover said.
“It’s remarkable to think that through this one boy’s experience, through the science that we generated that led his parents to finding us, to then developing this product through normal placebo-controlled trials and manufacturing this product, that Sam now has this medication prescription—and there are thousands around this country now … over 12,000 patients taking the medication today,” he said.
—Growing marijuana is easy. GW’s intellectual property is around how it turns the plant into a prescription product.
“One of the things we realized at the beginning was that if we were going to develop a standardized medicine from the cannabis plant, that actually there was no contracting organization that really could do that,” Gover said. “The size of the company that sits in the UK is a reflection of the fact that we do pretty much all of the key parts of R&D and manufacturing in-house. … The challenge, in terms of creating a medicine, really starts post-plant. The tens of millions in investment and the process, the technology, and the systems we have, are actually about taking that plant material and then going through various steps to end up with a pure product.”
—GW anticipates its drug for MS will be approved in the US and its drug for epilepsy in Europe—and that it, and other companies, will develop cannabis-based drugs to treat other conditions.
“For us as a company, I think we feel that the notion of cannabinoids as therapeutics in MS and in other areas … that era has now dawned,” Gover said. “I think we had to break down a number of obstacles, and some of it has taken 20 years to do that, but having done that, whether it’s ourselves or other companies in the room or around the country that want to develop FDA-approved medications from the cannabis plant, those doors are clearly open. … It’s a pretty interesting area now to be in, where I think—I hope—to see in another five to 10 years a whole range of these kind of medications.”
—The CBD craze, in a way, echoes the insight that prompted the company chairman, founder Geoffrey Guy, to start GW those 20 years ago.
“If you think about the cannabis plant as a plant that’s been in medicine—it’s a medicinal herb, only in the past few decades did it become a recreational drug—for three thousand years of medical use, and you hear that Queen Victoria was using it for this, and go back into ancient Egypt and China and all these different medical uses … In nature, the cannabis plant has more CBD than THC in it, and yet in the 1970s, ‘80s, and 90s, cannabis was essentially THC because it was bred for people to get high,” Gover said. “(Geoffrey Guy’s) insight was, well, if you think of three thousand years of experience, to explain all of that through THC because the plants wouldn’t have had much … His view, coupled with the science, was that CBD’s got to play a role.”
