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Jazz Pharmaceuticals has agreed to acquire GW Pharmaceuticals, maker of the first epilepsy drug derived from marijuana, for $7.2 billion in cash and stock.
The deal, which combines the two biopharmaceutical companies, signifies Jazz’s bet on the long-term prospects of cannabis-based therapies.
Jazz will pay $200 in cash and $20 in stock per GW share. The transaction is expected to close in the second quarter.
Cannabis stocks jumped on the news, with shares in Cassava Sciences, Sundial Growers, and Tilray closing up 59%, 16%, and 12%, respectively, on Wednesday.
Cannabis investors are also optimistic after three Democratic Senators released a statement supporting the decriminalization of marijuana.
GW’s drug Epidiolex is used to treat rare forms of epilepsy and had global sales of $510 million within two years of its 2018 launch. The deal will strengthen Jazz’s neuroscience portfolio, said Jazz CEO and Chairman Bruce Cozadd.
“We have a shared vision of developing and commercializing innovative medicines that address significant unmet needs in neuroscience and an approach of putting patients first,” GW CEO Justin Gover said. “Together, we will have an opportunity to reach and impact more patients through a broader portfolio of neuroscience-focused therapies than ever before.”
Shares in GW closed upy 44.5% on the news Wednesday, while shares in Jazz closed down nearly 4%.
