Earlier this year, Jazz Pharmaceuticals floated a “dramatic” shift to new drug revenue by 2022—a plan buoyed by its own cancer and sleep disorder launches in 2019 and 2020, and a fourth targeted for 2021. Now, the company is laying out a hefty chunk of change to expand its treatment focus and bring an entirely new drug into the mix.
Jazz Pharmaceuticals agreed to pony up $7.2 billion for cannabinoid hotshot GW Pharmaceuticals, whose epilepsy med Epidiolex could be on its way to blockbuster sales. The deal will move Jazz into the epilepsy market, expanding its current offerings beyond sleep disorders and cancer.
The acquisition breaks down like this: Jazz will shell out $220 per American Depository Share of GW, $200 of that in cash and $20 in Jazz common stock. That works out to a roughly 50% premium over GW’s Tuesday closing price.
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The deal positions Jazz to tap into the epilepsy market, expanding beyond its current offerings in oncology and sleep disorders. Jazz says it expects the buyout to accelerate double-digit revenue growth in the first full year of operations, with substantial growth to follow.
At the center of the deal is GW’s lead product Epidiolex, a cannabis-based drug approved to treat seizures from Lennox-Gastaut syndrome, tuberous sclerosis complex or Dravet syndrome. Even with COVID-19 headwinds, the drug managed to gin up 70% sales growth in 2020, GW said in its preliminary full-year sales report, bagging $144 million in the fourth quarter and $510 million for the full year.
Epidiolex also bears the distinction of being the first cannabis-derived medicine approved by the FDA and boasts a green light from the European Medicines Association under the name Epidyolex.
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The company also has cannabinoid products in the pipeline for autism and schizophrenia, as well as a late-stage candidate, nabiximols—known as Sativex outside the U.S.—designed to treat spasticity in multiple sclerosis.
GW kicked off a phase 3 trial of nabiximols in November and, at the time, said it expected to start four additional late-stage studies in late 2020 and into 2021, with data from the first trial potentially arriving as soon as the middle of this year.
Jazz, meanwhile, is well known for its blockbuster narcolepsy drug Xyrem—the standard treatment for sudden muscle weakness or excessive daytime sleepiness caused by the condition—which pulled $1.6 billion in sales in 2019. The company in July also bagged approval for a sister drug, Xywav—a low-sodium version of Xyrem that potentially offers better heart safety.
While the company has long depended on Xyrem to fuel its growth, Jazz expects roughly half of its revenues in 2022 to come from four new drugs, CEO Bruce Cozadd told Fierce Pharma earlier this year. Those drugs are Jazz’s sleep med Sunosi, its small-cell lung cancer drug Zepzelca, its Xyrem follow-up Xywav and blood cancer therapy JZP-458. Now, it looks as if GW’s Epidiolex is part of that effort, too.
