The British biotech firm GW Pharmaceuticals today signed up Japan's Otsuka to develop and market its pioneering cannabis-based drug Sativex in the US.

GW shares rose more than 3% in early trading, to 104p.

GW said it would receive milestone payments of up to $273m (£139m) as well as royalties on future sales. As part of the deal, Otsuka will pay for the US development of Sativex initially as a treatment for cancer pain but then also for further uses.

The two companies also signed a broad research collaboration.

GW chairman Dr Geoffrey Guy said: "This agreement represents a landmark event in the history of GW. Not only have we secured the development and marketing of our lead product, Sativex, in the world's largest market, we have also selected a strategic partner that will allow us to extend our cannabinoid pipeline."

Otsuka, a privately owned Japanese pharmaceutical giant, has carved out a niche in the US selling nerve-related (CNS) drugs.

It has had great success with its CNS product ABILIFY for schizophrenia which it took from launch to $1.9bn of sales in four years.

Dr Russell Portenoy, of the Beth Israel Medical Center in New York, and the main investigator of the first planned US Sativex study, said: "A previous Phase III clinical study showed that Sativex achieved a statistically significant improvement in pain relief in terminally ill cancer patients."

He said there are 3.9 million cancer patients in the US, 2.5 million of whom suffer pain. While opioids are highly effective, studies suggest that up to one-third of advanced cancer patients with pain do not receive adequate relief and new treatments are needed.

"Cannabinoid formulations may represent an important option in the future and the information obtained from clinical trials of Sativex will be critical in defining their role," Dr Portenoy said.

Analysts welcomed the deal.

Ibraheem Mahmood at Investec said: "GW has just landed its most important partnering deal. This is GW's third deal delivered ahead of expectations and means that Sativex is now partnered across virtually every major geography."

Outside the US, Sativex is sold in Canada for the relief of pain in multiple sclerosis sufferers and has been submitted to Canadian regulators for the relief of cancer pain.

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