8% fall in GW Pharma is buy back opportunity

I have just bought back the GW Pharma position sold on Monday given the current 10p drop in the share price, presumably on a market maker "tree shake" prior to the AGM.

GW Pharma falls ahead of AGM

GW Pharmaceuticals (GWP) Annual General Meeting is being held today at 11am. The shares are currently down 4p to 119p to sell after slipping significanly in the final hours of trading yesterday. I have been selling down some of my holding over the last 2 days following the news on Sativex UK/Spain registration and the Phase IIb cancer study,  meaning my position has been reduced by around two-thirds. I am continuing to hold a core position and may look to top up on any weakness but given the interim results are not due until May when further may be forthcoming on the Sativex approval process in Europe, these shares may drift a little unless a major new institution comes on board. A buy back point below 120 p looks enticing.

U.K. budget today at 12.30pm and political rant

So Alistair Darling gets on his feet for the U.K. budget at 12.30 GMT, the last budget before the General Election in May or June this year. It is not expected to offer much in addition to the pre-budget statement from November but politically Darling will attempt to give the message that Labour is managing the British economy out of recession in a sustainable way, whilst the Conservatives are being too aggressive in focusing on deficit reduction too early (the U.K. deficit is around 12% of spend) . In the last few weeks, this difference between the political parties has been exploited to paint David Cameron's Conservatives as a party of cutting. Prime Minister, Gordon Brown's, message seems to be working as the latest opinion poll puts the Conservatives on only a 5 point lead over Labour which would lead to a Hung parliament at the election. Many votes don't want to hear the message of austerity - "let them cut something as long as it doesn't affect me!". This worries economists because it may mean that lack of full control in Parliament may mean that deficit reduction plans are not agreed putting the U.K.'s Triple A credit rating at threat.  On the other hand, it could be argued that if a pact is made between one of the major parties and the Liberal Democrats, fiscal deficit reduction could be even more aggressive as the Lib Dems are stated that they too are aligned to cutting the deficit.


Any moves by Darling on a new tax on the banking system will be keenly watched but he has already stated that he will not move with international cooperation. In contrast, the Conservatives seem to be focused on introducing the tax with or without this international agreement. Sweden have already introduced such a tax. It would be a popular move to adopt such as tax and a vote winner.


Both major political parties in the U.K. have not strayed from the message that they will not cut front line services. But the difficulty is there to see, a large budget deficit and growing debt that needs to be dealt with. Taxing the banks and high earners is a popular move but likely to lead to a "brain drain" to more welcoming taxation environments such as Switzerland. Increasing taxation is only likely to stifle wealth creation in the longer term. Cuts in big spending departments such as social security and health seem to be the logical solution, but for both the Labour and Conservative governments this is politically unpalatable even though both leaders know it is necessary. Whether Brown and Cameron say once thing during the election and act differently once they are in No.10 Downing Street is a possibility since any risk to the AAA credit rating would be political suicide. It would be refreshing if politicians acknowledged that there is no magic bullet.  The U.K. must get the budget under control without putting the economy back into the recession. Rather than increasing taxes, cuts in big ticket departments such as Health must be on the agenda. U.K. voters have to understand they can't have it both ways i.e. strong public services and low taxes. I am not aligned to either of the major parties, but I am increasingly frustrated that the  reality of the situation is unwilling to be accepted by the electorate. 

FTSE 100 closes at 21 month high

The FTSE 100 ended at a 21 month high of 5,673, up 29 points. The market was boosted by a strong update from Legal and General and that the inflation rate fell sharply to 3% last month giving reassurance that the Bank of England will keep interest rates at low levels for the foreseeable future. The DOW Jones Industrials are currently up 103, to 10,889 as the markets continued to react positively to Obama's Victory in the House of Representatives on healthcare reform.

Desire Petroleum finally moves up

After several days of small, but steady falls, Desire Petroleum (DES) finally looks to be moving in the right direction with the shares currently up around 5.5%. Bulletin boards like iii.co.uk have been buzzing with around 1000 posts a day and the rumour mill surrounding the potential testing of core samples have been doing the rounds.  The results from Desire's Liz field are due any day which is increasing the volatility of this stock. Desire is not a stock "for widows or orphans" but the fact that it is so speculative makes the potential rewards so exciting. I have continued to hold as the share price has slipped over the last week and given the seismic data from the Desire field I am more than hopeful that the company's management will have chosen the Liz prospect for good reason i.e. that oil/gas shows are present.  The Falkland Islands drillers are at the high stress end of the spectrum and this week the adrenaline will be at maximum power as it could be the make or break for the stocks even though there are other drilling prospects for Ocean Guardian to drill.

GW Pharma announces positive clinical trial data in cancer pain

GW Pharma (GWP) announced today preliminary results of a Phase IIb dose-ranging trial evaluating the efficacy and safety of Sativex in the treatment of pain in patients with advanced cancer, who experience inadequate pain control during optimized chronic opioid therapy. 

This trial was performed in conjunction with GW's licensing partner for Sativex in the United States, Otsuka Pharmaceutical Co. Ltd..  In the US, cancer pain represents the initial target indication for Sativex. Key Points: - Study meets key objectives of providing data to support entry into Phase III - Sativex shows statistically significant differences from placebo in pain scores, according to both the continuous response analysis and change from baseline analysis in NRS average pain - GW and Otsuka now planning End of Phase II meeting with the FDA to gain endorsement of the proposed Phase III program 

GW Pharma continues upward momentum

GW Pharma (GWP) is currently up nearly 6% without any evidence that big buys are coming through for the company.  Momentum is certainly positive with the regulatory announcement last week on the progress of the European Sativex application. A  move over 130p seems feasible during the week and closer to 150p on final approval in May. Of course, an institutional buy of any size would accelerate matters as trading seems to be focused on private investors for now. Perhaps those boys in the City just fall asleep when it comes to decentralised applications, mutual recognitions and the like?!

U.S. Healthcare bill passes House of Representatives

On Sunday evening President Obama scored a major personal victory, with the House of Representatives approving the Senate bill overhauling the U.S. health-care system with the aim of extending insurance coverage to about 32 million Americans. The margin of victory was narrow, with the vote in favour 219 to 212 to approve the bill. All Republicans and 34 Democrats opposing. It bans insurance company practices like denying care for pre-existing conditions, imposing lifetime caps on coverage, while providing subsidies to buy private insurance in newly-created marketplaces called “exchanges”.

This means its potentially bad news for the big pharmaceutical companies given pricing concerns for the new "exchange" insurance schemes which may create downward pressure on reimbursement prices for branded drug. On the flip side, the extra population covered by the scheme will drive additional volumes of prescriptions. Astra Zeneca (AZN)  generates half its earnings in the U.S., whilst GSK, Novartis and Roche generate over a 1/3 of their earnings in the American market. 

Position in Coal of Africa initiated

Position reinitiated yesterday afternoon in Coal of Africa (CZA) on anticipation of UK full market listing in Q2 and a fall back in the share price from the previous sell level of 142p.  Revenue is expected to rise dramatically as production ramps up to 15 million tonnes of coal. Prices remain firm for coking and thermal coal on rising Asian demand.

Portfolio review of the week March 20th 2010

After 8 days of gains in the U.S. and a strong move upwards in the U.K., it was not surprising that the S&P 500 finally moved down. I remain cautious on the market at this level and am using the strength as an opportunity to sell down some positions. My ISA is now 60% in cash, after unit trust purchases bought in November has shown near 20% gains.

GW pharma (GWP) - An exceptional week for GWP as the company announced that all aspects of safety, quality and efficacy had been resolved for the UK/Spanish licence applications for multiple sclerosis drug, Sativex. The stock moved up from around 100p to finish the week at 121p. Though tempting to take profits, there is significant news flow yet to come from the company. A milestone payment from Bayer Schering of £10 million will be triggered on the UK licence approval in May. A further milestone payment of £2.5 million will be due from Almirall (GW's European partner) on Spanish approval, due Q3 (£8 million was paid in 2009). Results from the clinical study in cancer pain have been confirmed for Spring 2010. It is likely that global distribution deals for Asia and Latam will be announced at the interims in May.

The regulatory announcement this week is a ground breaking event for GW pharma. Sativex approval in Europe is  now assured. Given the company was founded in 1998 to develop Sativex, the end of a 12 year road is now in sight. Although reimbursement issues are yet to be resolved, the strength of the commercialisation partners (Bayer Schering and Almirall), will no doubt ensure that any issues are resolved.

Falkland Island Oil drillers (Desire Petroleum DES, Falkland Oil and Gas FOGL, Borders and Southern BOR) - After double digit increases in the Falkland Island oil explorers on Monday, the shares fell away during the rest of the week. News from Desire Petroleum's Liz field where the Ocean Guardian rig is drilling is expected any day. Most of my positions are held in controlled risk CFDs (contracts for difference) which limits downside on any bad news. Positive news from Liz, will drive these shares, particularly Desire petroleum, up at least 30% and possibly a lot more. Though risky, the risk/reward is enticing with the downside protected.

ITV (ITV) - ITV continued to tread water and finished the week at 54p. The only news was the size of Adam Crozier's pay and performance package which is geared to a recovery in the share price.

ARM Holdings (ARM) - A short was initiated this week and this finished on a small profit for the week. It was encouraging that despite large gains in the semiconductor stocks during the week, ARM did not participate in this rally. The rationale for the short in ARM and SSL were explained on a post during the week.

SSL International (SSL) -  A short initiated at 780p was down a couple of percent, with the stock closing at 792p yesterday.

Ithaca Energy (IAE) -  The North sea focused oil explorer moved up from 108p on Monday to finish the week at 134.5p, a gain of 24%. A position initiated on Tuesday was unfortunately closed too early at 124p and illustrates the caution needed when selling stocks into a positive momentum move especially when the stock is dual listed. Moves on the Canadian TSX, where commodity stocks powered up this week, drove the share price appreciation on this side of the Atlantic.

Micron Technology (MU) - Position closed at $10.14. The stock finished at $9.90 last night. Micron has rebounded strongly from around $8 in the last month and therefore an opportunity was taken to sell off on the rise.

Intel (INTC) -  An overnight position was taken on Intel which generated a 3% gain. No longer holding.

Markets finally slip after 8 days of gains

After 8 days of gains in U.S. stocks, they closed lower on Friday, with worries about the state of the Greek bail out returning and a retreat in the energy and commodity sectors. The Dow Jones Industrial Average, closed down 37 at 10,742, but was up 1.1% on the week and registered its 3rd weekly gain. The FTSE 100 initially move up to 5,685, levels not seen since 2008 in afternoon dealings, but the index closed at 5,650, up only 8 as the U.S. market moved into reverse.

After an an upbeat trading update from Lloyds Banking Group (LLOY) that the company will be profitable on a combined businesses basis in 2010, its shares moved up 8% to just over 60p. The company is 41% owned by the U.K. tax payer and the price is fast approaching the 74p the government paid to bail out the bank. Royal Bank of Scotland gained nearly 6% to 44.45p (close to the 50p government investment price), and Barclays rose almost 2% to 359.6p.There are rumours that Alistair Darling, the Chancellor, will announce that the Treasury will start selling these bank assets perhaps as soon as the Budget next week.

What next for Sativex cannabis spray?

Following today's RNS and WebCast relating to GW Pharma's cannabis spray, Sativex, the following steps are anticipated. The drug has now reached day 150 of the decentralised regulatory process (DCP) without any major issues, the only outstanding minor point is the Patient Leaflet:

1. Completion of regulatory documentation for decentralised application (patient information leaflet) with UK as RMS (Reference Member State) and Spain as CMS (Concerned Member State) - April 2010?

2. Closure of decentralised phase April-May 2010?

3. Grant of national licences in UK and Spain (following agreement on local labelling and packaging)- 30 days is standard approval - June 2010
4. Launch in UK - June 2010 (Q2 - company state high confidence of Q2 launch)
5. Start of Spanish reimbursement discussions - June 2010
6. Launch in Spain - September 2010 ( 3 months consultation on pricing)

7. Start of mutual recognition process in other European markets with UK as Reference Member state - July 2010?

8. Grant of mutual recognition in other major European markets (6 month approval normal) - Q1 2011 (possibly end 2010)

In parallel reimbursement discussions will be going on. The company will have submitted a price to the UK's Department of Health and unless there have been significant disagreement, Sativex will be reimbursable on the NHS from product launch. NICE (the National Institure of Clinical Excellence) may assess the drug later and boost uptake with the PCT's (Primary Care Trusts) in England and Wales, since budget holders will have guidance on usage.  In the meantime prescribers may use the drug as they wish and it will be paid by the NHS. In Scotland, the SMC (Scottish Medicines Consortium) needs to pre-approve drugs before launch, but the company should have this well in hand. In Spain, GW's partner Almirall will in discussions with the Spanish Ministry of Health after licence approval, and this is usually a 3 month process. U.K. approval will bring in £10 m from Bayer Schering , and in Spain Almirall will pay £2.5 m on pricing and regulatory approval.

Questions and answers from today's WebCast:

Q. What indication has been approved?

A. Symptomatic improvement  in symptoms of MS who have failed on other anti spasticity medications. 

Q. What territories are planned for Mutual Recognition?

A. GW and Almirall are putting together a list. Major commercial markets included. NICE preparation in hands of Bayer Schering, Market access team who have significant expertise.

Q. Any plans to expand label?

A. No, comfortable with indication.

Q. Is cancer pain trial on track for Spring. 

A. Yes

Q. What are launch logistics?

A. Sufficient launch stock. Manufacturing licence issued in 2009. Launch batches delivered into distribution chain on approval announcement.

Q. Is there capacity to cater for global demand?

A. Yes, capacity will be ramped up using 3rd parties.

Q. What are licensing plans outside Canada, UK, Europe and U.S..

A. Ambition to use the European approval as basis for filing in other parts of world. Distribution partners being discussed e.g. Australia,  Latin America, Africa.Update on rest of world at Interims in May.

Q. What is situation on Spain pricing?

A. Spanish Ministry of Health and Almirall will be in negotiations. Expect 3 months, maybe more.

Q. When are milestone payments due?

A. Milestone payments on reg. and pricing approval in Spain. Licence approval UK

Q. When is Canadian spasticity indication due?

A. Canadian reg. submission for spasticity filed end 2009. H2 2010 outcome. 

Q. Have you considered issue of pricing differentials in different countires?

A. Partners make decision on price. UK will be public domain once Almirall start price discussions. 

Faith in GW Pharma's Sativex drug pays off!

GW Pharma (GWP) released the following RNS this morning which is outstanding news. They key sentence is "The regulatory process has now reached "Day 150" of the decentralised procedure and both the UK and Spanish regulators have concluded that there are no major quality, safety or efficacy issues remaining to be resolved." This means that the efficacy concerns that stopped the previous decentralised European application has been addressed with the regulatory authorities. The company is now at a documentation phase relating to the PIL (patient information leaflet) and packaging artwork. Fantastic news as this is Contrarian Investor UK's  largest holding! 




UK AND SPANISH REGULATORS CONFIRM NO MAJOR ISSUES OUTSTANDING 
Regulatory Process Now at Advanced Stage. Approvals Expected Q2 2010 
Porton Down, UK, 18 March 2010: GW Pharmaceuticals plc (GWP:AIM) today provides an update on the progress of its regulatory submission for Sativex Oromucosal Spray for the treatment of the symptoms of spasticity due to Multiple Sclerosis. The regulatory submission was filed in the UK and Spain under the European decentralised procedure in May 2009, with the UK acting as the Reference Member State. The regulatory process has now reached "Day 150" of the decentralised procedure 
and both the UK and Spanish regulators have concluded that there are no major quality, safety or efficacy issues remaining to be resolved. Resolution is now required only of points of clarification related to finalisation of wording on the patient information leaflet. We expect this document to be reviewed by the regulators in the coming weeks. Once the regulators have agreed final wording on the patient leaflet, the decentralised procedure can close and the process will enter its final phase. This final phase, known as the national phase, takes place separately in the UK and Spain and its purpose is to finalise local wording on product packaging and related documents. GW therefore expects regulatory approval in the UK and Spain during Q2 2010. Dr Stephen Wright, GW's R&D Director, said, "This is a major milestone in the regulatory process for Sativex, and for GW's future prospects. We look forward to working with the regulators towards a successful completion of this process and to supporting our marketing partners as they prepare for product launch. This progress with Sativex also provides further validation of GW's cannabinoid platform and the significant long term promise of GW's portfolio of cannabinoid medicines." 
Sativex will be marketed in the UK by Bayer Schering Pharma, and in the rest of the European Union by Almirall S.A. Upon UK regulatory approval, GW expects to receive a GBP10m milestone payment from Bayer. A further GBP2.5m milestone payment is payable by Almirall following both regulatory and pricing approval in Spain. Following approval in the UK and Spain, submissions for approval will made in additional European countries during 2010 under the mutual recognition procedure. 

U.K. FTSE 100 finishes at 21 month high

The FTSE 100 finished at 5,645, up 24 points for the day and the highest level for 21 months as commodity stocks went higher on the weak dollar and Goldman Sachs predicted strong demand for raw materials. Ben Bernanke's statement that U.S. interest rates were likely to remain low for some time, has pressurised the dollar and driven commodity prices higher as their price in set in U.S. dollars.

Markets trade at highs and Contrarian Investor UK trims holdings

The DOW Industrials are currently up over 50 points, up for a seventh straight day, and trading at a 17month high. The FTSE 100 is up also up 38 points. Stocks are on the move up again amid optimism over the Federal Reserve sticking with its low interest rate stance for the foreseeable future and as expected, the Bank of England confirming that its Monetary Policy Committee voted unanimously in favour of keeping U.K. interest rates unchanged at its meeting earlier this month. Also, the U.S. Producer Price Index declined 0.6% in February, its largest drop in seven months. Taking out food and energy costs, the index gained 0.1%.  In the U.K., the number of people claiming unemployment benefits fell unexpectedly last month with those claiming Jobseeker's Allowance dropping by 32,300 to 1.59m in February, the biggest monthly fall since 1997 and against forecasts of a rise of 8,000. The jobless rate now stands at 7.8%. However, long-term unemployment, which includes those out of work for over a year, jumped by 61,000 to 687,000.

Finally commodity stocks were on the rise, Goldman Sachs issued a research note forecasting a surge in global demand. 

Against this background of euphoria, the traditional defensives (pharmaceuticals, tobacco and utilities) are being sold off. With over a week of daily rises, the stampede into the markets doesn't seem to be abating. Contrarian Investor U.K. is using this strength to sell more positions with the final tranche of Micron Technology and the Intel position bought yesterday being closed off this afternoon. The market may have more steam in it, but I am happy to hold some cash on the sidelines for now. As well as economic concerns, the Iranian Nuclear saga looks to be coming to a head and there is risk of an escalation of tension in the Middle East if Israel adopts a hard line, perhaps even risking Military action. As oil moves over $80, any such tension in the Middle East will push oil well over $100, which will undoubtedly stifle this muted global economic recovery. Then there are all the sovereign debt problems which are not going anywhere fast. Time to take a contrarian view, and move into a defensive stance for now.