RNS Number:4587U
GW Pharmaceuticals PLC
21 January 2004



Embargoed until 0700                                           21 January 2004


                             GW Pharmaceuticals plc
                             ("GW" or "the Group")

            Preliminary Results for the Year Ended 30 September 2003

GW Pharmaceuticals plc, the company which develops a range of new medicines
based on cannabis and other controlled drugs, announces its preliminary results
for the year ended 30 September 2003.

Highlights

   *Regulatory dossier for Sativex(R) submitted to the UK authorities in
    March 2003

   *Sativex regulatory assessment process well advanced. Completion expected
    during the second quarter of 2004.

   *Production, supply chain and marketing teams prepared for launch of
    Sativex

   *Marketing arrangements signed with Bayer in UK and Canada providing GW
    with total potential milestone payments in excess of #30m as well as a
    significant share of long term product sales revenues

   *Bayer extend option to licence Sativex in Europe, Australia and New
    Zealand into 2004

   *#19m net raised from share placing in June 2003

   *Five Phase III clinical trials recruiting as planned and due to report in
    2004

   *Net loss of #8.1m (2002: #11.2m) in line with expectations

   *Cash and short term deposits of #32.0m at year end (2002: #20.2m)

Dr Geoffrey Guy, Executive Chairman, commented: "Having filed the UK regulatory
submission for Sativex in March 2003, the application is now well advanced
towards achieving the critical milestone of regulatory approval. The final
stages in the regulatory process are underway; the timing of completion of this
process is a matter of scheduling within the regulatory agency and is currently
expected to occur during the second quarter of 2004.

"GW and Bayer are working very closely together to prepare for the anticipated
launch of Sativex and we expect to be able to move swiftly towards market launch
following a successful approval. The Bayer agreement, together with a successful
institutional share placing undertaken last summer, has significantly enhanced
the Group's financial position.

"We anticipate that 2004 will see the regulatory approval and launch of Sativex.
Achievement of this milestone would represent a transformation for GW as a
pharmaceutical company and provide validation for the future therapeutic and
market opportunities in our product pipeline. We have every reason to be
extremely excited about the year ahead."

A presentation for analysts is taking place today at 09.30 at Weber Shandwick
Square Mile, Fox Court, 14 Gray's Inn Road, London WC1. An audio webcast of the
presentation will be available on GW's website at www.gwpharm.com from 15.00
today.

Enquiries:

GW Pharmaceuticals plc                                 (21/01/04) 020 7067 0700
Dr Geoffrey Guy, Chairman                            (Thereafter) 01980 557 000
Justin Gover, Managing Director

Weber Shandwick Square Mile                                      020 7067 0700
Kevin Smith



Embargoed until 0700                                           21 January 2004

                             GW Pharmaceuticals plc
                             ("GW" or "the Group")

            Preliminary Results for the Year Ended 30 September 2003

                           Managing Director's Review

Following the successful Phase III clinical trial results announced at the end
of 2002, GW filed for regulatory approval for Sativex in the UK and is preparing
for market launch. Sativex will be exclusively marketed in the UK by Bayer
following the signing of a marketing agreement during the year between the two
companies. This is GW's first commercial partnership, a major landmark for the
Group.

Sativex Regulatory Status

The UK regulatory submission to the Medicines and Healthcare products Regulatory
Agency (MHRA) for Sativex took place at the end of March 2003, as predicted at
the time of the Group's Initial Public Offering in 2001.

The evaluation of the Sativex dossier by the MHRA continues to proceed according
to the normal regulatory process and is now well advanced. Following submission,
this process involved the receipt of detailed questions in the second half of
2003. After meetings with the MHRA, responses to all of the questions were
submitted. The next stage in the process, which involves the assessment of GW's
responses, is now taking place. The application will then be reviewed by the
Committee on Safety Medicines (CSM).

The timing of these final stages of the process is entirely a matter of
scheduling within the MHRA. We currently expect the process to complete during
the second quarter of 2004.

In the mean time, as preparations for launch continue, the UK Home Office has
been putting in place the necessary plans for placing Sativex into an
appropriate schedule under controlled drugs regulations in anticipation of MHRA
approval. In November 2003, Caroline Flint MP, Home Office Minister stated:
"Once marketing approval has been received, we will move without delay to seek
Parliament's agreement to any necessary changes to the misuse of drugs
legislation. Our aim is to ensure ready and early availability of the drug as a
prescribed medicine."

The regulatory dossier provides a comprehensive analysis of data to support the
quality, safety and efficacy of Sativex. In effect, the dossier supports the
regulatory case for the first modern botanical medicine and, in particular, it
reflects the application of GW's unique expertise and range of skills in
botanical science. In addition to the more conventional safety and efficacy data
requirements, therefore, GW has successfully overcome considerable research
challenges in plant genetics, cultivation processes, raw material
standardisation, extraction technology, analytical methodology, process
validation, stability testing and establishment of appropriate methods and
standards for finished product manufacture.

Bayer

In May 2003, GW signed an exclusive UK marketing agreement with Bayer for
Sativex. This agreement provided GW with a signature fee of #5m and future cash
payments of up to #20m. More recently, GW and Bayer have extended their
partnership to Canada, providing for further payments to GW of up to #7.75m.

As part of the original agreement, Bayer obtained an option for a limited period
of time to widen this partnership for Sativex to other countries in Europe as
well as Australia and New Zealand. The companies have recently agreed to extend
this option period into 2004.

We believe that the arrangements with Bayer represent a validation of GW's
declared strategy of late-stage licensing. In addition to potentially
substantial milestone payments, GW has retained a significant share of product
sales revenues. We have long believed that maximisation of shareholder returns
is best achieved through focusing on revenue sharing arrangements. This can only
be achieved to any significant degree when drug development companies shoulder a
reasonable proportion of the risk and cost of product development so as to
retain a valuable financial interest in product sales.

Bayer and GW have established a strong working relationship. Both companies
share great expectations for Sativex. It will be a unique product which
represents genuine scientific innovation specifically targeted to address real,
important and currently unmet medical needs.

Ready for Launch

GW and Bayer have been working closely together to prepare for what we hope will
be one of the most exciting new product launches in recent times. The marketing,
production and supply chain teams are prepared to implement the Sativex launch
plan as soon as UK regulatory approval is obtained.

GW will not only be the product licence holder for Sativex but will also be
responsible for commercial production. Manufacturing scale-up and technology
transfer to our various manufacturing sub-contractors was completed last year
and we are now operating at full commercial scale and to all appropriate
manufacturing standards. Indeed, considerable quantities of stocks of active raw
materials are now being produced ahead of anticipated market launch.

Clinical Trials Data

An integral part of our launch plan is the presentation and publication of data
from the Phase II and III clinical trials completed to date.

As reported last year, GW's randomised placebo controlled trials have shown
consistently positive results in treating the symptoms of multiple sclerosis
(MS), in particular pain, spasticity and sleep disturbance, as well as
neuropathic pain associated with other intractable diseases. Importantly, every
patient on each trial remains on their existing medication so that improvements
seen reflect benefits over and above those obtained on available prescription
medicines.

The trials have also demonstrated that Sativex has an excellent safety profile.
Adverse events are generally mild or moderate in intensity and are usually
diminished through reduction of dose. In total, over 700 patient-years of safety
data have been accumulated to date.

At the end of each trial, patients are provided with the option to continue on
long term treatment. Over 75 per cent of patients elect to continue. This
programme has provided GW with important information on the long term effects of
Sativex treatment. Recent analysis of the data demonstrates that benefits
obtained in the placebo-controlled studies are maintained undiminished over
time, with the magnitude of the change from baseline being substantial.
Importantly, these benefits are maintained without any corresponding increase in
dose over time - in other words, there is no evidence of tolerance to the
therapeutic effects of Sativex.

Data from GW's trials have been presented at a range of international
conferences including the European Congress for Treatment and Research in
Multiple Sclerosis (ECTRIMS), UK Pain Society, International Cannabinoid
Research Society, American Academy of Pain Management, International Continence
Society and the Royal Society of Medicine. The first publication appeared in
2003 in Clinical Rehabilitation and several papers are due for publication in
peer reviewed journals in 2004.

Ongoing Phase III Trials

GW's Phase III trials programme consists of a total of nine trials. Positive
results from the first four trials have already been announced. Five additional
trials are ongoing and are due to report in 2004. These randomised
placebo-controlled parallel group studies examine the effects of Sativex in MS
spasticity, MS bladder dysfunction, neuropathic pain in spinal cord injury,
neuropathic pain (as evidenced by allodynia) and cancer pain.

Throughout its history, GW has pursued a strategy of parallel development to
minimise risks and optimise use of development time. Having achieved positive
results from the first four trials, the purpose of the ongoing trials is to
provide supplementary data to more closely target specific symptoms, broaden the
patient pool, expand therapeutic indications, support international regulatory
submissions, enhance publications and provide additional marketing support.

New Therapeutic Areas

In addition to Sativex, the Group continues to research cannabis and
cannabinoids in a range of new therapeutic markets. A successful regulatory
approval for Sativex will provide further validation of the portfolio of
follow-on cannabinoid products and indications in GW's pipeline.

Our Cannabinoid Research Institute continues to advance Phase II clinical
candidates as well as engaging in primary research with world leading
cannabinoid scientists. This year, research has focused on post-operative pain,
rheumatoid arthritis and the potential uses of Cannabidiol (CBD), a
non-psychoactive cannabinoid.

In the coming year, clinical interests are being expanded into diabetic
neuropathy and Crohn's disease. We also intend to evaluate the possibility of
studying the effects of cannabinoids on disease modification in MS. As reported
above, we have seen evidence of sustained improvements in MS symptoms in our
long term clinical studies. This information, together with recent published
reports showing interesting disease modification effects of cannabinoids in
animal models of MS, provides us with encouragement that this important area
warrants further scientific examination.

In addition to clinical research, GW's in-house pharmacology team and external
collaborators are focusing on neuroprotection and anti-cancer effects.

Advanced Dispensing System

We continue to make progress with the development of our Advanced Dispensing
System (ADS) to dispense methadone safely and reliably for the treatment of drug
addiction, although with Sativex taking priority, the ADS programme received
reduced financial and resource commitment during the year. The first patient was
successfully trialled in the period and a considerable amount of work undertaken
in electronics, software and communications development.

We were delighted that the potential of the ADS technology was recognised this
year through receipt of the Best Technology award at the AiM 2003 annual awards
dinner.

In the current year, ADS represents a high priority for the Group. A next
generation dispensing device is in development and validation of software and
electronics is well underway. We expect that the current year will see
significant progress towards the first commercialisation of ADS.

Intellectual Property

GW continues its focus on building a strong intellectual property portfolio. The
Group now has rights to 24 patent families and also has an option to licence
other cannabinoid patents from the Hebrew University, Jerusalem. A number of
patent applications are timed to grant at around the time of the launch of
Sativex. We also continue to extend our plant variety registrations and
trademark portfolio.

R&D Director

We are pleased to report the recent appointment of Dr Stephen Wright to our
senior management team as R&D Director. Dr Wright has joined GW from Ipsen,
where he was Senior Vice President of Clinical Research & Development and a
member of the UK Board of Directors. In this role he led teams responsible for
regulatory success in both the US and Europe. He was previously at Abbott
Laboratories based in the US, firstly as Medical Director of Immunosciences,
then Venture Head of Neuroscience. Prior to this, he was Associate Medical
Director of Glaxo UK and Director of Immunology, Inflammation and Dermatology
Research of Scotia Pharmaceuticals. Dr Wright's early medical career in the NHS
culminated in him becoming Consultant Senior Lecturer at The Royal Free Hospital
School of Medicine. He has authored more than 100 publications.

Outlook

We fully expect 2004 to be another year of significant achievement for GW. Most
importantly, subject to MHRA approval, we will see Sativex launched onto the
market. In addition, we expect to complete further Phase III trials and prepare
international regulatory submissions. At the same time, we will look to broaden
our commercial arrangements in preparation for international product launches.
We also expect to advance the next wave of cannabinoid product opportunities
through clinical trials and to make significant steps towards the first
commercialisation of our ADS technology.

Justin Gover
Managing Director

                                Financial Review

This year has seen GW commence the transition from a cash consuming research and
development company to one which generates revenues from commercial
relationships. GW finished the year with greatly improved balance sheet strength
that will underpin our commercial position going forward.

Results of Operations

The Group loss for the year ended 30 September 2003 was #8.1m (2002: #11.2m).
The reduced loss reflects the #5.0m received as a signature fee from Bayer.

Research and development expenditure, which is expensed as incurred, increased
to #12.7m (2002: #10.7m). Management and administrative expenses increased to
#2.6m (2002: #2.3m) as a result of the increasing size of the Group's
activities. Management and administrative expenses (including amortisation of
goodwill) account for 17% (2002: 17%) of total expenditure with research and
development expenditure accounting for the remaining 83% (2002: 83%).

The average headcount of the Group for the year was 118 (2002:102) and we ended
the year with 127 employees (2002: 110). Capital expenditure was #0.3m (2002:
#0.7m). This modest expenditure reflects the fact that GW's manufacturing
sub-contractors incur the principal capital expenditure costs associated with
launch production. The Group benefited from net interest income of #0.7m (2002:
#0.8m).

Bayer Agreement

The Bayer agreement enables GW to maintain a significant share of long-term
product revenues whilst also benefiting from upfront payments. In addition to
the #5m fee already received, the UK agreement provides for a further #20m of
future milestone payments, a significant proportion of which falls due on the
initial regulatory approval of Sativex.

Of the #20m future milestones, #10m can be drawn down by GW in advance as an
interest-free working capital loan facility. To date, GW has elected not to
utilise this resource. On approval of Sativex, irrespective of whether GW has
elected to draw down this facility, Bayer has the option to convert #10m of the
future #20m milestone payments into GW shares at an agreed premium to the share
price at the time of conversion.

The extension of the Bayer arrangements to Canada, which was signed after the
financial year-end, provides for an additional #7.75m of future milestones as
well as a significant share of product revenues.

Share Issue

On 27 June 2003 9,904,395 new ordinary shares were placed with institutional
investors at #2.00 per share. The placing was significantly oversubscribed and
raised approximately #19.0m after expenses. The placing proceeds will enable the
Group to accelerate the development of additional income streams arising from
its core skills in cannabis medicines, phyto-medicines and secure dispensing
technology. The placing also widened GW's institutional shareholder base,
providing a shareholder structure more appropriate for the next phase of the
Group's growth.

Research and Development Tax Credit

The Group has claimed a research and development tax credit of #1.56m (2002:
#0.94m) which is shown as a credit to the profit and loss account. This sum is
subject to agreement with the Inland Revenue.

Liquidity and Cash Resources

The Group's net funds comprise cash balances together with amounts held on short
term deposit. Cash and short term deposits at 30 September 2003 totalled #32.0m
(2002: #20.2m). The net cash outflow during the year (before financing and
management of liquid resources) was #7.4m (2002: #9.9m).

David Kirk
Finance Director

                                    - Ends -
Enquiries:

GW Pharmaceuticals plc                                (21/01/04) 020 7067 0700
Dr Geoffrey Guy, Chairman                           (Thereafter) 01980 557 000
Justin Gover, Managing Director

Weber Shandwick Square Mile                                      020 7067 0700
Kevin Smith


Preliminary Results for the Year Ended 30 September 2003
Consolidated Profit and Loss Account

                                               Notes         2003         2002
                                                           #000's       #000's
Turnover                                                    5,000            -
Research and development costs                            (12,678)     (10,748)
Management and administrative expenses                     (2,643)      (2,251)
                                                       __________   __________
Operating loss                                            (10,321)     (12,999)
Interest receivable                                           699          831
Interest payable                                               (6)          (1)
                                                       __________   __________
Loss on ordinary activities before taxation                (9,628)     (12,169)
Tax credit on loss on ordinary activities          2        1,557          942
                                                       __________   __________
Loss on ordinary activities after taxation
 being retained loss for the financial year                (8,071)     (11,227)
                                                       ==========   ==========

Loss per share - basic and diluted                 3        (7.8p)      (11.6p)

All activities relate to continuing operations.

The Group has no recognised gains and losses other than the losses above and
therefore no separate statement of total recognised gains and losses has been
presented.


Preliminary Results for the Year Ended 30 September 2003
Consolidated Balance Sheet

                                           Notes    At 30 Sept      At 30 Sept
                                                          2003            2002
                                                        #000's          #000's
Fixed assets
Intangible assets - goodwill                             6,279           6,635
Tangible assets                                            802           1,002
                                                    __________      __________
                                                         7,081           7,637
                                                    __________      __________
Current assets
Debtors                                                  2,147           1,274
Cash held on deposit as short term
investment                                              29,045          18,271
Cash at bank and in hand                                 2,999           1,929
                                                    __________      __________
                                                        34,191          21,474
Creditors: Amounts falling due within one year          (3,988)         (3,258)
                                                    __________      __________
Net current assets                                      30,203          18,216
                                                    __________      __________
Total assets less current liabilities                   37,284          25,853
Creditors: Amounts falling due after more
 than one year                                              (7)            (18)
Provisions for liabilities and charges                    (311)            (38)
                                                    __________      __________
Net assets                                              36,966          25,797
                                                    ==========      ==========

Capital and reserves
Called-up share capital                                    110             100
Share premium account                           4       47,165          27,935
Other reserves                                  4       19,262          19,262
Profit and loss account                         4      (29,571)        (21,500)
                                                    __________      __________
Equity shareholders' funds                      5       36,966          25,797
                                                    ==========      ==========



Preliminary Results for the Year Ended 30 September 2003
Consolidated Cash Flow Statement
                                               Notes         2003         2002
                                                           #000's       #000's
Net cash outflow from operating activities         6       (8,631)     (10,425)
Returns on investments and servicing of finance               538          857
Taxation                                                      941          347
Capital expenditure                                          (284)        (667)
                                                       __________   __________
Cash outflow before management of liquid
 resources and financing                                   (7,436)      (9,888)
Management of liquid resources                            (10,774)       5,729
Financing                                                  19,280        4,438
                                                       __________   __________
Increase in cash during the year                            1,070          279
                                                       ==========   ==========




Notes:


1 Basis of presentation

The preliminary statement covers the year ended 30 September 2003. It has been
prepared using the same accounting policies as those adopted in preparing the
statutory accounts for the year ended 30 September 2003.

The Board of Directors of the Company approved the statement on 20 January 2004.

The 2003 and 2002 accounts received unqualified reports from the Auditors and
did not contain any statements under S237(2) or (3) of the Companies Act 1985.
The 2003 accounts will be filed with the Registrar of Companies following the
Annual General Meeting. The 2002 accounts have been filed. The statutory
accounts will be issued to shareholders shortly, together with the notice for
the Annual General Meeting to be held on 2 March 2004 at 11am at Porton Down
Science Park, Salisbury, Wiltshire.

The following information does not constitute the Company's statutory accounts
under section 240 of the Companies Act 1985 for the year ended 30 September 2003
but is derived from those accounts.


2 Tax credit on loss on ordinary activities

The tax credit of #1,557,000 (2002: #942,000) has arisen as a result of the
research and development expenditure claimed under the Finance Act 2000.

At 30 September 2003 the Group had trading losses of approximately #22.0m (2002:
#18.7m) available to carry forward against future tax liabilities.

The tax credit and trading losses to be carried forward for the year are subject
to the agreement of the Inland Revenue.


3 Loss per share

The calculations of loss per share are based on the following losses and numbers
of shares.
                                    Basic                     Diluted
                        _________________________  _________________________
                               2003          2002         2003          2002
                             #000's        #000's       #000's        #000's
Loss for the financial
 year                        (8,071)      (11,227)      (8,071)      (11,227)
                        ============= ===========  ===========   ===========

                                                          2003          2002
                                                        Number        Number
                                                     of shares     of shares
Weighted average
number of shares:                                  102,850,219    96,386,304
                                                   ===========   ===========

Since the Group reported a net loss, diluted loss per share is equal to basic
loss per share.


4 Reserves

                                 Share
                               premium        Other     Profit and
                               account     reserves   loss account       Total
Group                           #000's       #000's         #000's      #000's
At 1 October 2002               27,935       19,262        (21,500)     25,697
Equity share issue              20,041            -              -      20,041
Expense of equity share issue     (811)           -              -        (811)
Retained loss for the year           -            -         (8,071)     (8,071)
                            __________   __________     __________   _________
At 30 September 2003            47,165       19,262        (29,571)     36,856
                            ==========   ==========     ==========   =========


5 Reconciliation of movements in Group shareholders' funds

                                                           2003           2002
                                                         #000's         #000's
Loss for the financial year                              (8,071)       (11,227)
New ordinary shares issued net of expenses               19,240          4,448
                                                     __________     __________
Net addition / (reduction) to shareholders' funds        11,169         (6,779)
Opening shareholders' funds                              25,797         32,576
                                                     __________     __________
Closing shareholders' funds                              36,966         25,797
                                                     ==========     ==========


6 Reconciliation of operating loss to net cash outflow from operating activities

                                                          2003            2002
                                                        #000's          #000's
Operating loss                                         (10,321)        (12,999)
Depreciation charge                                        446             405
Amortisation of goodwill                                   356             357
Loss on disposal of fixed assets                            40              36
(Increase) / decrease in debtors                          (105)            271
Increase in creditors                                      953           1,505
                                                    __________      __________
Net cash outflow from operating activities              (8,631)        (10,425)
                                                    ==========      ==========





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