GW Pharmaceuticals plc handed over development and U.S. marketing rights to its cannabinoid cancer pain compound to Otsuka Pharmaceutical Co. Ltd. in a deal that brings GW $18 million up front, along with milestone payments that could add $255 million.

The companies also said they are in detailed discussions for a long-term cannabinoid research collaboration in central nervous system disorders and cancer treatment.

Under the agreement, Porton Down, UK-based GW granted Otsuka, of Tokyo, an exclusive license in the U.S. for Sativex, GW's lead product, in cancer pain. GW also would be entitled to supply and royalty payments in the deal.

GW will be responsible for clinical development and regulatory approvals, with Otsuka paying the bill. GW will continue holding the investigational new drug application until a new drug application is filed, which would be in Otsuka's name. Otsuka would then be responsible for development and regulatory steps for any future indications.

Last year the FDA allowed Sativex to enter directly into late-stage development for pain in patients with advanced cancers who aren't helped by opioid medications. The companies plan to enter a pivotal Phase II/III dose-ranging trial in cancer pain later this year.

Representatives from both companies declined to speculate about advancing Sativex into other indications, saying they wanted to maintain the focus on cancer pain.

Currently, the drug is approved and marketed in Canada for the symptomatic relief of central neuropathic pain in multiple sclerosis. An application for its use in cancer pain is pending. In addition, applications are pending in four European countries for use of the drug to relieve spasticity in MS.

The research collaboration on other indications is expected to be signed later this year, representatives of the companies said in a conference call. It would involve Otsuka paying for the evaluation of a range of cannabinoids as drug candidates in CNS and cancer treatments. The most promising candidates would be subject to a license by GW to Otsuka. Otsuka would fund global development activities, and GW would receive "commercially reasonable financial terms," the companies said in a news release.

Geoffrey Guy, GW chairman, expressed confidence in the long-term collaboration during the conference call, commenting that "Otsuka is absolutely the partner of choice for us because of their depth in science and presence in the target market of the United States."

Otsuka is comprised of 51 businesses around the world, with revenues of $6.8 billion in 2005. Its products address central nervous system, cardiovascular, circulatory, gastrointestinal, respiratory, dermatological, ophthalmologic and cancer markets, and it is pursuing research in genomics and protein function.

Sativex is a pump-action oromucosal spray that delivers a formulation containing delta 9 tetrahydrocannabinol (THC) and cannabidiol (CBD).

Each 100 microliter spray contains 2.7 mg of THC and 2.5 mg of CBD. Sativex is thought to act via cannabinoid receptors distributed throughout the central nervous system and in immune cells. Those receptors are distributed throughout the pain pathways of the nervous system, and their activation is known to reduce pain in relevant pain models.

In a European Phase II study involving patients with advanced cancers, 40 percent of participants on Sativex showed a greater than 30 percent improvement in pain. Sativex showed positive results in a completed Phase III study in Europe in 177 patients with cancer pain.

Patients in the study had advanced cancer and were experiencing pain that was not responding adequately to strong opioid medication (e.g., morphine).

In addition to study medication, all patients remained on their existing opioid and other analgesic medication during the trial. In this study, Sativex achieved a statistically significant improvement in pain compared to placebo as measured on a numerical rating scale, a primary endpoint of the study.