The puff daddies

After the Government’s decision to take a softer line on cannabis use, Helen Power meets the managing director of the only UK company licensed to undertake research on the drug

On 23 October, the Government announced a major U-turn on criminal policy and cannabis. Slipped into David Blunkett’s statement on recreational use was a message on cannabis-based medicines with major commercial implications for a small biotech venture. Millions of clandestine cannabis smokers may have rolled a celebratory joint behind closed doors, but for GW Pharmaceuticals, the message was that the money is about to start rolling in.

Blunkett’s indication that the law would be amended to allow the NHS to prescribe cannabis-based medication came as a shock to the markets. It sent the shares of GW soaring from 13p to 108p. However, GW was less surprised than the markets. Its managing director Justin Gover has been waiting for the announcement since 1998, when the company’s first cannabis crop was planted in a huge glasshouse in a
secret location.

GW is the only commercial organisation in the world that is licensed to cultivate and supply cannabis for medical research. It was formed in 1998 when pharma-entrepreneur Dr Geoffrey Guy successfully asked the UK Government for licences to cultivate cannabis on a huge scale. He was joined in 1999 by Gover, who took control of the business aspects of the company, leaving Guy free to concentrate on the science.

The pair worked together at Ethical Holdings, where Gover was head of corporate affairs until 1998 and Guy was chairman and chief executive until 1997. There are no lawyers at GW, and the company calls on external counsel only for the most specialist advice. Since its formation, GW has used Rowe & Maw for corporate and employment work, alongside patent agents Boult Wade Tennant for intellectual property (IP) advice. The pharmaceutical regulatory and basic contractual work is done by Guy, Gover and other GW employees.

Under Section 7 of the Misuse of Drugs Act, licences are required to conduct research on drugs listed under Schedule 1 of the act. The drugs that fall under this section include LSD, MDMA (ecstasy) and cannabis, substances which the authorities deem both potentially dangerous in terms of addiction and to have no recognised medical benefits. GW and its founders strongly disagreed with this definition of cannabis, but before they could prove this to the Government they had to navigate a regulatory maze.
Clearances had to be obtained from both the Home Office and the Medicines Control Agency (MCA), part of the Department of Health, before any research could begin. Initially, permits had to be obtained to grow cannabis on a massive scale, something entirely unique in the UK. According to Gover, the company had to propose a full programme as to how the plant would be changed into a medicine. The Government vetted the individuals, the location and the purpose of the research. Gover will not reveal the secret location of his glasshouses, presumably for fear that drug-crazed lawyers will storm his cannabis farms. What is clear, though, is that they are somewhere in the South of England and are used by GW to cultivate the plant on a massive scale.

There are also stringent regulatory requirements on the medical side. “There was a very close dialogue with the MCA because of the sensitive nature of the research,” says Gover. “It was a much closer relationship than is normal when developing a medicine.”

The first human trials started in October 1999. Both the trials and the trialists were vetted by the Government. Further trial phases saw the company encounter yet more regulatory hurdles, and even more arise as GW markets its product. Overseas interest in the product has already upped the regulatory workload – senior managers must apply for export and import permits in order to provide foreign companies with access to the research.

While Guy tended the crops and oversaw the patient research, Gover grew the business. He did the Insead MBA programme in Fontainebleau, France, and says that the qualification and his background in corporate affairs enabled him to deal with the basic legal aspects of financial transactions. Until GW listed on AIM in June this year, corporate lawyers barely got a look-in. Prior to the listing, there were three private fundraising rounds in three years, and these were dealt with entirely by the GW staff, primarily Gover. When Rowe & Maw was called in to do the listing there was some cleaning up to do – new employment contracts, share option schemes and an IP audit were obvious areas – but no legal landmines were uncovered.
Gover has been an extremely successful fundraiser. Over three years, GW has raised more than £40m, but it has not yet made a single penny. The Government’s announcement, though, means that payday is within sight. According to Gover, Blunkett’s bombshell was no real surprise to the company. “The Government’s policy with respect to approved cannabis-based medicines has been set for many years, certainly since Labour came into power in 1997,” he says. “They’ve always said that if the medical benefits were proven, it would be approved. What we just heard, however, is the clearest statement yet that these medicines will be available on prescription.”

GW can clearly take much of the credit for the Government’s stance. While the change of heart over criminal policy is not directly related to GW’s research, Gover believes there is some connection. “The changes represent an understanding at government level that there are a number of issues which need to be addressed,” he says. “Cannabis does not lead to the same level of harm as other drugs and the new position allows the Government and the general public to draw a distinction.”

This, believes Gover, is particularly important for those patients who might benefit from GW’s products. “The general change means patients won’t be treated as social outcasts should they take these medicines, as they are certainly entitled to do to improve the quality of their lives,” he says.

Research so far has concentrated on the use of cannabis derivatives for pain relief, particularly for sufferers of multiple sclerosis (MS). The trials are currently in Phase III, so the company is hoping to submit products to the MCA for approval in 2003. The under-the-tongue sprays designed by the company will probably be available to MS sufferers on the NHS by 2004. The company has backed up its research with the full force of IP law and hopes to be able to license the products to pharmaceutical companies worldwide. The company is looking for a distribution agreement in the UK; Gover says he expects Rowe & Maw to be involved with the licensing process.

Gover, however, adds that cannabis potentially has much wider applications. He mentions head injuries and epilepsy as potential targets for GW. The company has already sewn up many areas of application with patent filings, which together with a four-year research headstart should give GW a global monopoly in cannabis-based medical technology. The company itself, though, will not grow much more. There are currently around 90 staff and Gover expects this to grow to a maximum of about 120, keeping the company in its lucrative niche market. He has no plans at the moment to include in-house counsel, saying that it is important to retain the flexibility and expertise of external counsel. An in-house patent attorney is the most obvious possibility, he says, but for the moment he intends to stick with Boult Wade Tennant.

Cannabis research, says Gover, was a maverick concept back in 1998. “It would never have been considered by the mainstream of large pharmaceutical companies,” he says. “In the founding team at GW were people prepared to take on a project that nobody else was interested in.”
Opportunities to work on cutting-edge scientific developments, to alleviate the suffering of MS patients and to turn a decent profit all at the same time are pretty thin on the ground. Should Gover have a change of heart on in-house counsel, GW would surely not be short of job applications.
Justin Gover
Managing director
GW Pharmaceuticals

Organisation GW Pharmaceuticals
Sector Biotechnology
Employees 90
Legal capability None
Managing Director Justin Gover
Head Office Porton Down, Sailisbury
Main law firm Rowe & Maw
Patent Agent Boult Wade Tennant