Jazz Pharmaceuticals has agreed to acquire GW Pharmaceuticals for US$7.2 billion in cash and stock.

UK-based GW is the maker of Epidiolex, for children with severe epilepsy, which was the first drug derived from the cannabis plant to be approved by the US Food and Drug Administration in June 2018.

GW is also in late-stage trials for another cannabis-based product to treat multiple sclerosis, and is working on candidates for autism and schizophrenia.

ASX-listed Medlab Clinical – which has just received approval to commence a Phase 3 study in the US for its medicinal cannabis candidate NanaBis – hailed the deal as good news for cannabis companies focused on pharmaceutical-grade products.

CEO Dr Sean Hall said: “The high premium being paid for GW Pharma validates Medlab’s own decision to invest in scientifically optimised cannabinoid formulations and pursue the drug approval pathway, rather than over-the-counter products.

“It also shows there’s possibly a lot more for ASX investors to gain… as the medicinal cannabis sector matures.”

GW’s rigorous approach to developing and producing products has made the company a much-touted example of the potential for cannabis.