Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) agreed to pay $7.2 billion in stock and cash for Marijuana Derived Epilepsy Drug – Epidiolex developed by GW Pharmaceuticals Plc (NASDAQ: GWPH). The deal will be closed in Q2.
As per the pact terms, GW Pharmaceuticals investors will receive American depositary shares, each at $220. The deal includes Jazz stock worth $20 and cash of $200 for each share.
Cures rare forms of the disease
GW Pharmaceuticals Epilepsy drug – Epidiolex, which is based on marijuana, is used to treat rare forms of the disease. According to a communiqué from the companies on Wednesday, Epilepsy drug garnered $510 million in 2020. GW Pharmaceuticals collected $32,500 from each patient as annualized charge in the US in 2018.
Strengthens neuroscience drug pipeline
Jazz strengthens its neuroscience drug pipeline through this deal. Bruce Cozadd, CEO of Jazz, said Epidiolex expects to generate annual sales of $1 billion soon. The cannabinoid-based drugs of GW Pharmaceuticals are tested to treat schizophrenia, autism, and other medical conditions.
Jazz, which is based in Dublin, engages in the manufacture of drugs to treat rare diseases. These drugs generated sales of $1.7 billion in Q3 2020 (up 7.5% YoY). Xyrem, its best-selling drug, helps to cure narcolepsy.
Following the deal, Jazz’s shares declined by 5.1% on Wednesday on concerns that the company pays a higher premium to analysts estimates of GW Pharmaceuticals financial performance. An SVB Leerink LLC analyst, Ami Fadia, said the pact is a strategic fit for Jazz, which focuses on neuroscience.
With this deal, Jazz added cannabinoid-based products to its product line. It is an aggressive move for Jazz to takeover GW Pharmaceuticals at a higher price. The shares of GW Pharmaceuticals trade higher at $214.77 (up 46.85%) on March 2, 2021, whereas Jazz, is also rebounding.
Jazz posted revenues of $665 million (up 14.4% YoY) in Q4 2020, exceeding the analysts’ forecasts. As per analysts’ estimates, the company expects to post sales of $2.7 billion in 2021. Jazz offers treatments for indications in hematology-oncology, indications in neuroscience, and sleep disorders. Its promising drug Zepzelca offers a cure for small lung cancer.