2015-12-08

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

Commission File Number 001-35892

GW PHARMACEUTICALS PLC

(Exact name of Registrant as specified in its charter)

England and Wales

(Jurisdiction of incorporation or organization)

Sovereign House, Vision Park

Chivers Way, Histon

Cambridge, CB24 9BZ

United Kingdom

(Address of principal executive offices)

Justin D. Gover, Chief Executive Officer

Sovereign House, Vision Park

Chivers Way, Histon

Cambridge, CB24 9BZ

United Kingdom

Telephone No. (44) 1223 266800

E-Mail: investors@gwpharm.com

Facsimile: (44) 1223 235667

(Name, Telephone, E-mail and/or Facsimile number and Address of
Company Contact Person)

Securities registered or to be registered pursuant to Section
12(b) of the Act.

Securities registered or to be registered pursuant to Section
12(g) of the Act:
None

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act:
None

Indicate the number of outstanding shares of each of the
issuer’s classes of capital or common stock as of the close of the
period covered by the annual report: 261,180,173 ordinary shares,
par value £0.001 per share.

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
x No ¨

If this report is an annual or transition report, indicate by
check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of “accelerated filer and large accelerated
filer” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this
filing:

U.S. GAAP ¨

International Financial Reporting Standards as issued by the
International Accounting Standards Board x

Other ¨

If “Other” has been checked in response to the previous
question, indicate by check mark which financial statement item the
registrant has elected to follow.

Item 17 ¨ Item 18 ¨

If this is an annual report, indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes ¨ No x

Table of Contents (to be updated)

GENERAL INFORMATION

In this annual report on Form 20-F (“Annual Report”), “GW
Pharma,” the “Group,” the “company,” “we,” “us” and “our” refer to
GW Pharmaceuticals plc and its consolidated subsidiaries, except
where the context otherwise requires.

Sativex
®and Epidiolex
®are registered trademarks of GW Pharmaceuticals
plc.

PRESENTATION OF FINANCIAL AND OTHER DATA

The consolidated financial statement data as at September 30,
2015 and 2014 and for the years ended September 30, 2015, 2014 and
2013 have been derived from our consolidated financial statements,
as presented elsewhere in this Annual Report, which have been
prepared in accordance with International Financial Reporting
Standards, or IFRS, as issued by the International Accounting
Standards Board, or IASB, and as adopted by the European Union and
audited in accordance with the standards of the Public Company
Accounting Oversight Board (United States). The consolidated
financial statement data as at September 30, 2012 and 2011 have
been derived from our consolidated financial statements, which are
not presented herein, which have also been prepared in accordance
with IFRS as issued by the IASB, and as adopted by the European
Union and audited in accordance with the standards of the Public
Company Accounting Oversight Board (United States).

The consolidated financial data as at September 30, 2011 has
been derived, after certain reclassifications to conform to the
current presentation, from our consolidated financial statements,
which have been prepared in accordance with IFRS as adopted by the
European Union, or IFRS-EU, and which are not included elsewhere in
this Annual Report. These consolidated financial statements have
not been audited in accordance with the standards of the Public
Company Accounting Oversight Board (United States). There are no
differences applicable to us between IFRS as issued by the IASB and
IFRS-EU and PCAOB for any of the periods presented herein.

All references in this Annual Report to "$" are to U.S. dollars,
all references to "£" are to pounds sterling and all references to
"€" are to Euros. Solely for the convenience of the reader, unless
otherwise indicated, all pounds sterling amounts as at and for the
year ended September 30, 2015 have been translated into U.S.
dollars at the rate at September 30, 2015, the last business day of
our year ended September 30, 2015, of £0.6611 to $1.00 and unless
otherwise indicated, all pounds sterling amounts as at and for the
year ended September 30, 2014 have been translated into U.S.
dollars at the rate at September 30, 2014, the last business day of
our year ended September 30, 2014, of £0.6166 to $1.00. These
translations should not be considered representations that any such
amounts have been, could have been or could be converted into U.S.
dollars at that or any other exchange rate as at that or any other
date.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report contains forward-looking statements that are
based on our current expectations, assumptions, estimates and
projections about us and our industry. All statements other than
statements of historical fact in this Annual Report are
forward-looking statements.

These forward-looking statements are subject to known and
unknown risks, uncertainties, assumptions and other factors that
could cause our actual results of operations, financial condition,
liquidity, performance, prospects, opportunities, achievements or
industry results, as well as those of the markets we serve or
intend to serve, to differ materially from those expressed in, or
suggested by, these forward-looking statements. These
forward-looking statements are based on assumptions regarding our
present and future business strategies and the environment in which
we expect to operate in the future. Important factors that could
cause those differences include, but are not limited to:

Additional factors that could cause actual results, financial
condition, liquidity, performance, prospects, opportunities,
achievements or industry results to differ materially include, but
are not limited to, those discussed under “Risk Factors” or
elsewhere in this Annual Report. Additional risks that we may
currently deem immaterial or that are not presently known to us
could also cause the forward-looking events discussed in this
Annual Report not to occur. The words “believe,” “may,” “will,”
“estimate,” “continue,” “anticipate,” “intend,” “expect” and
similar words are intended to identify estimates and
forward-looking statements. Estimates and forward-looking
statements speak only at the date they were made, and we undertake
no obligation to update or to review any estimate and/or
forward-looking statement because of new information, future events
or other factors. Estimates and forward-looking statements involve
risks and uncertainties and are not guarantees of future
performance. Our future results may differ materially from those
expressed in these estimates and forward-looking statements. In
light of the risks and uncertainties described above, the estimates
and forward-looking statements discussed in this Annual Report
might not occur and our future results and our performance may
differ materially from those expressed in these forward-looking
statements due to, inclusive of, but not limited to, the factors
mentioned above. Because of these uncertainties, you should not
make any investment decision based on these estimates and
forward-looking statements.

NOTE REGARDING EXPANDED ACCESS STUDIES

The expanded access studies we currently support are
uncontrolled, carried out by individual physician investigators
independent from us, and not always conducted in strict compliance
with Good Clinical Practices, all of which can lead to an observed
treatment effect that may differ from one seen in
placebo-controlled trials. Data from these studies provide only
anecdotal evidence of efficacy for regulatory review, although they
may provide supportive safety information for regulatory review.
These studies contain no control or comparator group for reference
and are not designed to be aggregated or reported as study results.
Moreover, data from such small numbers of patients may be highly
variable. Such information, including the statistical principles
that the independent investigators have chosen to apply to the
data, may not reliably predict results achieved after systematic
evaluation of the efficacy in company-sponsored clinical trials or
evaluated via other statistical principles that may be applied in
these trials. Reliance on such information may lead to Phase 2
and/or Phase 3 clinical trials that are not adequately designed to
demonstrate efficacy and could delay or prevent our ability to seek
approval of Epidiolex. Physicians conducting these studies may use
Epidiolex in a manner inconsistent with GW’s protocols, including
in children with conditions different from those being studied in
GW-sponsored trials. Any adverse events or reactions experienced by
subjects in the expanded access program may be attributed to
Epidiolex and may limit our ability to obtain regulatory approval
with labeling that we consider desirable, or at all.

PART I

Not Applicable.

Not Applicable.

The following table summarizes our consolidated financial data
as at the dates and for the periods indicated. The consolidated
financial statement data as at September 30, 2015 and 2014 and for
the years ended September 30, 2015, 2014 and 2013 have been derived
from our consolidated financial statements, as presented elsewhere
in this Annual Report, which have been prepared in accordance with
IFRS, as issued by the IASB, and as adopted by the European Union
and audited in accordance with the standards of the Public Company
Accounting Oversight Board (United States). The consolidated
financial statement data as at September 30, 2012 and 2011 has been
derived, after certain reclassifications to conform to the current
presentation, from our consolidated financial statements, which are
not presented herein, which have also been prepared in accordance
with IFRS as issued by the IASB, and as adopted by the European
Union and audited in accordance with the standards of the Public
Company Accounting Oversight Board (United States). The selected
consolidated financial data as at September 30, 2011 has been
derived, after certain reclassifications to conform to the current
presentation, from our consolidated financial statements, which
have been prepared in accordance with IFRS-EU, and which are not
included elsewhere in this Annual Report. These consolidated
financial statements have not been audited in accordance with the
standards of the Public Company Accounting Oversight Board (United
States). There are no differences applicable to us between IFRS as
issued by the IASB and IFRS-EU and PCAOB for any of the periods
presented herein.

Our consolidated financial statements are prepared and presented
in pounds sterling, our presentation currency. Solely for the
convenience of the reader our consolidated financial statements as
at and for the year ended September 30, 2015 have been translated
into U.S. dollars at $1.00 = £0.6611 based on the certified foreign
exchange rates published by Federal Reserve Bank of New York on
September 30, 2015. Such convenience translation should not be
construed as a representation that the pound sterling amounts have
been or could be converted into U.S. dollars at this or at any
other rate of exchange, or at all.

Our historical results are not necessarily indicative of the
results that may be expected in the future. The following selected
consolidated financial data should be read in conjunction with our
audited consolidated financial statements included elsewhere in
this Annual Report and the related notes and Item 5, “Operating and
Financial Review and Prospects” below.

Exchange rate information

The table below shows the period end, average, high and low
exchange rates of U.S. dollars per pound sterling for the periods
shown. Average rates are computed by using the noon buying rate of
the Federal Reserve Bank of New York for the U.S. dollar on the
last business day of each month during the relevant year indicated
or each business day during the relevant month indicated. The rates
set forth below are provided solely for your convenience and may
differ from the actual rates used in the preparation of our
consolidated financial statements included in this Annual
Report.

Not Applicable.

Not Applicable.

Our business has significant risks. You should carefully
consider the following risk factors and all other information
contained in this Annual Report, including our consolidated
financial statements and the related notes. The risks and
uncertainties described below are those significant risk factors,
currently known and specific to us that we believe are relevant to
our business, results of operations and financial condition.
Additional risks and uncertainties not currently known to us or
that we now deem immaterial may also impair our business, results
of operations and financial condition.

Risks Related to Our Business

We are dependent on the success of our product candidates, none
of which may receive regulatory approval or be successfully
commercialized.

Our success will depend on our ability to successfully
commercialize our product pipeline, including commercialization of
Epidiolex for both Dravet syndrome and LGS, Sativex for cancer
pain, and our other cannabinoid product candidates for type-2
diabetes, cancer, epilepsy and schizophrenia. We are evaluating
Epidiolex for the treatment of Dravet syndrome and LGS in the
United States and have initiated Phase 3 trials for Dravet syndrome
and LGS; however, Epidiolex may never receive U.S. regulatory
approval for the treatment of either of these indications. We are
evaluating Sativex in Phase 3 trials for the treatment of cancer
pain in the United States and the results of none of the three
Phase 3 cancer pain trials for Sativex show a statistically
significant difference for Sativex compared with placebo, therefore
Sativex may never receive U.S. regulatory approval for the
treatment of cancer pain. Even if completed Phase 3 clinical trials
and/or Phase 3 clinical trials conducted for U.S. approval show
positive results, there can be no assurance that the FDA will
approve Epidiolex, Sativex or any other product candidate for any
given indication for several potential reasons, including failure
to follow Good Clinical Practice, or GCP, negative assessment of
risk to benefit, unacceptable risk of abuse or diversion,
insufficient product quality control and standardization, non-GMP
compliant manufacturing facilities and in the absence of a protocol
agreed through the FDA’s Special Protocol Assessment process,
refusal by FDA to accept our clinical trial design/or failure to
agree on appropriate clinical endpoints.

Our ability to successfully commercialize Epidiolex, Sativex and
our other product candidates will depend on, among other things,
our ability to:

Our failure or delay with respect to any of the factors above
could have a material adverse effect on our business, results of
operations and financial condition.

Our product candidates, if approved, may be unable to achieve
the expected market acceptance and, consequently, limit our ability
to generate revenue from new products.

Even when product development is successful and regulatory
approval has been obtained, our ability to generate significant
revenue depends on the acceptance of our products by physicians and
patients. We cannot assure you that Epidiolex or our other product
candidates will achieve the expected market acceptance and revenue
if and when they obtain the requisite regulatory approvals. The
market acceptance of any product depends on a number of factors,
including the indication statement and warnings approved by
regulatory authorities in the product label, continued
demonstration of efficacy and safety in commercial use, physicians’
willingness to prescribe the product, reimbursement from
third-party payers such as government health care systems and
insurance companies, the price of the product, the nature of any
post-approval risk management plans mandated by regulatory
authorities, competition, and marketing and distribution support.
Any factors preventing or limiting the market acceptance of our
products could have a material adverse effect on our business,
results of operations and financial condition.

In respect of our product candidates targeting rare indications,
orphan drug exclusivity may afford limited protection, and if
another party obtains orphan drug exclusivity for the drugs and
indications we are targeting, we may be precluded from
commercializing our product candidates in those indications during
that period of exclusivity.

The first New Drug Application, or NDA, applicant with an orphan
drug designation for a particular active moiety to treat a specific
disease or condition that receives FDA approval is entitled to a
seven-year exclusive marketing period in the United States for that
product, for that indication. There is no assurance that we will
successfully obtain orphan drug designation for future rare
indications or orphan exclusivity upon approval of any of our
product candidates that have already obtained designation. Even if
we do obtain orphan exclusivity for any product candidate, the
exclusive marketing rights may be lost if the FDA later determines
that the request for designation was materially defective or if the
manufacturer is unable to assure sufficient quantity of the drug.
Moreover, a drug product with an active moiety that is a different
cannabinoid from that in our drug candidate or, under limited
circumstances, the same drug product, may be approved by the FDA
for the same indication during the period of marketing exclusivity.
The limited circumstances include a showing that the second drug is
clinically superior to the drug with marketing exclusivity through
a demonstration of superior safety or efficacy or that it makes a
major contribution to patient care. In addition, if a competitor
obtains approval and marketing exclusivity for a drug product with
an active moiety that is the same as that in a product candidate we
are pursuing for the same indication, approval of our product
candidate would be blocked during the period of marketing
exclusivity unless we could demonstrate that our product candidate
is clinically superior to the approved product. In addition, if a
competitor obtains approval and marketing exclusivity for a drug
product with an active moiety that is the same as that in a product
candidate we are pursuing for a different orphan indication, this
may negatively impact the market opportunity for our product
candidate. There have been legal challenges to aspects of the FDA’s
regulations and policies concerning the exclusivity provisions of
the Orphan Drug Act, and future challenges could lead to changes
that affect the protections afforded our products in ways that are
difficult to predict. In a recent successful legal challenge, a
court invalidated the FDA’s denial of orphan exclusivity to a drug
on the grounds that the drug was not proven to be clinically
superior to a previously approved product containing the same
ingredient for the same orphan use. In response to the decision,
the FDA released a policy statement stating that the court’s
decision is limited just to the facts of that particular case and
that the FDA will continue to require the sponsor of a designated
drug that is the “same” as a previously approved drug to
demonstrate that its drug is clinically superior to that drug upon
approval in order to be eligible for orphan drug exclusivity, or in
some cases, to even be eligible for marketing approval. In the
future, there is the potential for additional legal challenges to
the FDA’s orphan drug regulations and policies, and it is uncertain
how such challenges might affect our business.

We have to date commercialized only one product,
Sativex.

Our only approved product, Sativex is currently being
commercialized for spasticity due to multiple sclerosis, or MS,
outside the United States. Even if we obtain regulatory approval
for a product other than Sativex, our future success will still
depend in part on the continued successful commercialization of
Sativex. Although Sativex is currently approved in 28 countries
outside of the United States for MS spasticity, and is sold in 15
of those countries, it may never be successfully commercialized in
all of these jurisdictions. The commercial success of Sativex for
MS spasticity depends on a number of factors beyond our control,
including the willingness of physicians to prescribe Sativex to
patients, payers’ willingness and ability to pay for the drug, the
level of pricing achieved, patients’ response to Sativex, the
ability of our marketing partners to generate sales and, given that
we generate revenue from the supply of Sativex to our partners at a
fixed percentage of partners’ net sales and that any increase in
our manufacturing costs will adversely affect our margins and our
financial condition, our ability to manufacture Sativex on a cost
effective and efficient basis. Accordingly, we cannot assure you
that we will succeed in generating revenue growth through the
commercialization of Sativex for MS spasticity. If we are not
successful in the continued commercialization of Sativex for MS
spasticity, our business, results of operations and financial
condition may be harmed.

We expect to face intense competition, often from companies with
greater resources and experience than we have.

The pharmaceutical industry is highly competitive and subject to
rapid change. The industry continues to expand and evolve as an
increasing number of competitors and potential competitors enter
the market. Many of these competitors and potential competitors
have substantially greater financial, technological, managerial and
research and development resources and experience than we have.
Some of these competitors and potential competitors have more
experience than we have in the development of pharmaceutical
products, including validation procedures and regulatory matters.
In addition, Sativex and our product candidates, if successfully
developed, will compete with, product offerings from large and
well-established companies that have greater marketing and sales
experience and capabilities than we or our collaboration partners
have. In particular, Insys Therapeutics, Inc. has publicly stated
its intention to develop cannabidiol (CBD) in Dravet syndrome, LGS,
glioma and potentially other indications, Zogenix, Inc. is
developing low dose fenfluramine in Dravet syndrome, and other
companies with greater resources than us may announce similar plans
in the future. In addition, there are non-FDA approved CBD
preparations being made available from companies in the medical
marijuana industry, which may be competitive to Epidiolex. If we
are unable to compete successfully, our commercial opportunities
will be reduced and our business, results of operations and
financial conditions may be materially harmed.

Product shipment delays could have a material adverse effect on
our business, results of operations and financial
condition.

The shipment, import and export of Epidiolex, Sativex and our
other product candidates require import and export licenses. In the
United States, the FDA, U.S. Customs and Border Protection, and the
Drug Enforcement Administration, or DEA, and in the United Kingdom,
the Home Office, and in other countries, similar regulatory
authorities regulate the import and export of pharmaceutical
products that contain controlled substances, including Sativex,
Epidiolex and our other product candidates. Specifically, the
import and export process requires the issuance of import and
export licenses by the relevant controlled substance authority in
both the importing and exporting country. We may not be granted, or
if granted, maintain, such licenses from the authorities in certain
countries. Even if we obtain the relevant licenses, shipments of
Sativex, Epidiolex and our product candidates may be held up in
transit, which could cause significant delays and may lead to
product batches being stored outside required temperature ranges.
Inappropriate storage may damage the product shipment resulting in
a partial or total loss of revenue from one or more shipment of
Sativex, Epidiolex or our other product candidates. A partial or
total loss of revenue from one or more shipment of Sativex,
Epidiolex or our other product candidates could have a material
adverse effect on our business, results of operations and financial
condition.

If the price for Sativex or any future approved products
decreases or if governmental and other third-party payers do not
provide adequate coverage and reimbursement levels our revenue and
prospects for profitability will suffer.

Reimbursement systems in international markets vary
significantly by country and by region, and reimbursement approvals
generally must be obtained on a country-by-country basis. Where we
have chosen to collaborate with a third party on product candidate
development and commercialization, our partner may elect to reduce
the price of our products in order to increase the likelihood of
obtaining reimbursement approvals. In many countries, products
cannot be commercially launched until reimbursement is approved and
the negotiation process in some countries can exceed 12 months. In
addition, pricing and reimbursement decisions in certain countries
can be affected by decisions taken in other countries, which can
lead to mandatory price reductions and/or additional reimbursement
restrictions across a number of other countries, which may thereby
adversely affect our sales and profitability. In the event that
countries impose prices that are not sufficient to allow us or our
partners to generate a profit, our partners may refuse to launch
the product in such countries or withdraw the product from the
market, which would adversely affect sales and profitability. For
example whereas the All Wales Medicines Strategy Group has
recommended Sativex for use in MS spasticity in Wales, the National
Institute for Clinical Excellence published MS treatment guidelines
which did not recommend Sativex for use in England. In Italy the
government approves an annual quota for purchasing hospital
medicines from each pharmaceutical company. If the public spending
on a pharmaceutical company’s hospital medicines breaks the
approved annual quota, the pharmaceutical company has to pay back
50% of the payments it has received for having sold medicines to
public hospitals in excess of their approved annual quota. This has
caused us to commence discussions with our partner, Almirall, in
order to ascertain how any reimbursement to the Italian government
will be allocated between the parties so as to maintain a level of
profitability for us on our sales of Sativex in Italy and has also
caused us to commence legal proceedings in Italy to challenge the
quota levied on Sativex hospital sales by the Italian government.
Whilst these examples all refer to the commercialization of
Sativex, the same or similar events, such as price decreases,
government mandated rebates or unfavorable reimbursement decisions,
could affect the pricing and reimbursement of Epidiolex and our
other product candidates and could have a material adverse effect
on our business, results of operations and financial condition.

Problems in our manufacturing process, failure to comply with
manufacturing regulations or unexpected increases in our
manufacturing costs could harm our business, results of operations
and financial condition.

We are responsible for the manufacture and supply of Sativex to
our collaboration partners and for the manufacture and supply of
Sativex, Epidiolex and other product candidates for use in clinical
trials. The manufacturing of Sativex and our product candidates
necessitates compliance with Good Manufacturing Practice, or GMP,
and other regulatory requirements in jurisdictions internationally.
Our ability to successfully manufacture Sativex, Epidiolex and
other product candidates involves cultivation of botanical raw
material from specific cannabinoid plants, extraction and
purification processes, manufacture of finished products and
labeling and packaging, which includes product information, tamper
evidence and anti-counterfeit features, under tightly controlled
processes and procedures. For Sativex and certain of our product
candidates, production also requires the cultivation of cannabinoid
plants under highly controlled and standardized conditions. In
addition, we must ensure chemical consistency among our batches,
including clinical batches and, if approved, marketing batches.
Demonstrating such consistency may require typical manufacturing
controls as well as clinical data. We must also ensure that our
batches conform to complex release specifications. For each step in
the manufacturing process for Sativex, we are currently reliant on
single manufacturing facilities and no back-up facilities are yet
in place. We have a second site at which we can grow the specific
cannabinoid plants which produce the CBD used in Epidiolex, but we
are currently reliant on a single manufacturing facility, and no
back-up facilities are yet in place, for the later steps in the
Epidiolex production process. Because Sativex is a complex mixture
manufactured from plant materials, and because the release
specifications may not be identical in all countries, certain
batches may fail release testing and not be able to be
commercialized; a number of our product candidates (excluding
Epidiolex) also consist of a complex mixture manufactured from
plant materials, and are therefore subject to a similar risk. If we
are unable to manufacture Sativex, Epidiolex or other product
candidates in accordance with regulatory specifications, or if
there are disruptions in our manufacturing process due to damage,
loss or otherwise, or failure to pass regulatory inspections of our
manufacturing facilities, we may not be able to meet current demand
or supply sufficient product for use in clinical trials, and this
may also harm our ability to commercialize Sativex, Epidiolex and
our product candidates on a timely or cost-competitive basis, if at
all. We are in the process of expanding and upgrading parts of our
growing and manufacturing facilities in order to meet future demand
and FDA requirements, a program which requires significant time and
resources. We are planning a significant expansion of our growing
facilities over the next few years in order to meet potential
demand for Epidiolex, including working with several new
contractors and adopting new methods in order to handle and process
bulk quantities of botanical raw material. We are planning to
increase the scale in which we manufacture Epidiolex over the next
few years in order to meet potential demand for Epidiolex,
including working with several new contractors and, potentially,
adopting new processes. These activities may be unsuccessful, may
lead to delays, interruptions to supply, or may prove to be more
costly than anticipated. We may fail to expand our growing and
manufacturing capability in time to meet market demand for our
products and product candidates. Any problems in our growing or
manufacturing process could have a material adverse effect on our
business, results of operations and financial condition.

In addition, before we can begin commercial manufacture of
Sativex and any other product candidates for sale in the United
States, we must obtain FDA regulatory approval for the product,
which requires a successful FDA inspection of our manufacturing
facilities, processes and quality systems in addition to other
product-related approvals. Further, pharmaceutical manufacturing
facilities are continuously subject to inspection by the FDA and
foreign regulatory authorities, before and after product approval.
Due to the complexity of the processes used to manufacture Sativex,
Epidiolex and our other product candidates, we may be unable to
initially or continue to pass federal, state or international
regulatory inspections in a cost effective manner. If we are unable
to comply with manufacturing regulations, we may be subject to
fines, unanticipated compliance expenses, recall or seizure of any
approved products, total or partial suspension of production and/or
enforcement actions, including injunctions, and criminal or civil
prosecution. These possible sanctions would adversely affect our
business, results of operations and financial condition.

Further, the processes we use for cultivation of botanical raw
material and the production of product candidates for use in
clinical trials may be different to the processes we use to produce
commercial product and/or may not be capable of producing
sufficient quantities of product for commercial purposes. We may
therefore need to undertake additional manufacturing process
development and scale-up activities before we can commercialize a
product. This may include the conduct of bioequivalence studies to
demonstrate that product produced by the process used to
manufacture on a commercial scale is the same as the material used
in clinical trials. If we cannot demonstrate that our commercial
scale product is the same as material used in our clinical trials,
we may not be permitted to sell that product, which could have an
impact on our business, results of operations and financial
condition.

Product recalls or inventory losses caused by unforeseen events,
cold chain interruption and testing difficulties may adversely
affect our operating results and financial condition.

Sativex and our product candidates are manufactured and
distributed using technically complex processes requiring
specialized facilities, highly specific raw materials and other
production constraints. The complexity of these processes, as well
as strict company and government standards for the manufacture of
our products, subjects us to production risks. For example, during
the manufacturing process we have from time to time experienced
defects in components which have caused vial sealing faults,
resulting in vial leakage, pump dispenser faults which have
resulted in under-filling of vials and misalignment of labels and
tamper evident seals, as well as receipt of faulty electronic dose
counters from our supplier. While product batches released for use
in clinical trials or for commercialization undergo sample testing,
some defects may only be identified following product release. In
addition, process deviations or unanticipated effects of approved
process changes may result in these intermediate products not
complying with stability requirements or specifications. Some of
our products must be stored and transported at temperatures within
a certain range, which is known as "strict cold chain" storage and
transportation. If these environmental conditions deviate, our
products' remaining shelf-lives could be impaired or their efficacy
and safety could become adversely affected, making them no longer
suitable for use. The occurrence or suspected occurrence of
production and distribution difficulties can lead to lost
inventories, and in some cases product recalls, with consequential
reputational damage and the risk of product liability. The
investigation and remediation of any identified problems can cause
production delays, substantial expense, lost sales and delays of
new product launches.

Sativex and our product candidates contain controlled
substances, the use of which may generate public controversy.

Since Sativex, Epidiolex and our other product candidates
contain controlled substances, their regulatory approval may
generate public controversy. Political and social pressures and
adverse publicity could lead to delays in approval of, and
increased expenses for, Sativex and our product candidates. These
pressures could also limit or restrict the introduction and
marketing of Sativex and our product candidates. Adverse publicity
from cannabis misuse or adverse side effects from cannabis or other
cannabinoid products may adversely affect the commercial success or
market penetration achievable by Sativex and our product
candidates. The nature of our business attracts a high level of
public and media interest, and in the event of any resultant
adverse publicity, our reputation may be harmed.

Business interruptions could delay us in the process of
developing our product candidates and could disrupt our product
sales.

Loss of our manufacturing facilities, our growing plants, stored
inventory or laboratory facilities through fire, theft or other
causes, or loss of our botanical raw material due to pathogenic
infection or other causes, could have an adverse effect on our
ability to meet demand for Sativex, to continue product development
activities and to conduct our business. Failure to supply our
partners with commercial product may lead to adverse consequences,
including the right of partners to take over responsibility for
product supply. We currently have insurance coverage to compensate
us for such business interruptions; however, such coverage may
prove insufficient to fully compensate us for the damage to our
business resulting from any significant property or casualty loss
to our inventory or facilities.

We have significant and increasing liquidity needs and may
require additional funding.

Our operations have consumed substantial amounts of cash since
inception. Excluding receipts from milestone fees, our cash flow
used for operating activities and capital expenditure, less
proceeds from finance leases, for the years ended September 30,
2015 and September 30, 2014 was £64.4 million and £19.9 million,
respectively. In the first six months to March 31, 2016, we expect
our net cash outflow used for operating activities to be in the
range of £32-37 million ($48-56 million) as we aim to progress four
Epidiolex Dravet and LGS Phase 3 clinical trials towards completion
in 2016, initiate clinical trial programs for Epidiolex in new
indications, scale up our Epidiolex growing and manufacturing
activities to supply near-term demand and increase spend on U.S.
commercial operations as we prepare to commercialize Epidiolex. We
also expect our capital expenditure to decrease to approximately
£13-15 million ($20-23 million) in 2016 as we complete construction
of our upgraded commercial manufacturing facilities and expand
Epidiolex growing and manufacturing capacity. Research and
development, management and administrative expenses and cash used
for operations will continue to be significant and may increase
substantially in future connection with new research and
development initiatives, continued product commercialization
efforts and as we continue to grow as a U.S. public company. We may
need to raise additional capital to fund our operations, continue
to conduct clinical trials to support potential regulatory approval
of marketing applications, and to fund commercialization of our
products.

The amount and timing of our future funding requirements will
depend on many factors, including, but not limited to:

While we expect to fund our future capital requirements from a
number of sources including cash flow from operations (including
milestone and other payments from our partners), the proceeds from
further public offerings, the proceeds from the exercise of share
options and warrants, we cannot assure you that any of these
funding sources will be available to us on favorable terms, or at
all. Further, even if we can raise funds from all of the above
sources, the amounts raised may not be sufficient to meet our
future capital requirements.

The presence or absence of one or more new large orders in a
specific quarter, our ability to process orders or the cancellation
of previous orders may cause our results of operations to fluctuate
significantly on a quarterly basis.

We supply Sativex to our commercial partners in response to
their monthly purchase order schedules. Historically, the size of
each purchase order has fluctuated. As a result, the presence or
absence in a specific quarter of one or more new large orders or
delays in our ability to process large orders or the cancellation
of previous orders may cause our results of operations to fluctuate
on a quarterly basis. These fluctuations may be significant from
one quarter to the next. Any demands that require us to quickly
increase production may create difficulties for us. In addition,
our limited commercial history and the characteristic of our orders
in any quarterly period make it very difficult to accurately
predict or forecast our future operating results.

We are exposed to risks related to currency exchange rates.

We conduct a significant portion of our operations outside the
United Kingdom. Because our financial statements are presented in
pounds sterling, changes in currency exchange rates have had and
could have a significant effect on our operating results. Exchange
rate fluctuations between local currencies and the pound sterling
create risk in several ways, including the following: weakening of
the pound sterling may increase the pound sterling cost of overseas
research and development expenses and the cost of sourced product
components outside the United Kingdom; strengthening of the pound
sterling may decrease the value of our revenues denominated in
other currencies; the exchange rates on non-sterling transactions
and cash deposits can distort our financial results; and commercial
Sativex pricing and profit margins are affected by currency
fluctuations.

If product liability lawsuits are successfully brought against
us, we will incur substantial liabilities and may be required to
limit the commercialization of Sativex and our product
candidates.

Although we have never had any product liability claims or
lawsuits brought against us, we face potential product liability
exposure related to the testing of our product candidates in human
clinical trials, and we currently face exposure to claims in
jurisdictions where we market and distribute Sativex. We may face
exposure to claims by an even greater number of persons if we begin
marketing and distributing our products commercially in the United
States and elsewhere. Now, and in the future, an individual may
bring a liability claim against us alleging that Sativex or one of
our product candidates caused an injury. While we continue to take
what we believe are appropriate precautions, we may be unable to
avoid significant liability if any product liability lawsuit is
brought against us. Although we have purchased insurance to cover
product liability lawsuits, if we cannot successfully defend
ourselves against product liability claims, or if such insurance
coverage is inadequate, we will incur substantial liabilities.
Regardless of merit or eventual outcome, liability claims may
result in:

Counterfeit versions of our products could harm our business

Counterfeiting activities and the presence of counterfeit
products in a number of markets and over the Internet continue to
be a challenge for maintaining a safe drug supply for the
pharmaceutical industry. Counterfeit products are frequently unsafe
or ineffective, and can be life-threatening. To distributors and
users, counterfeit products may be visually indistinguishable from
the authentic version. Reports of adverse reactions to counterfeit
drugs along with increased levels of counterfeiting could be
mistakenly attributed to the authentic product, affect patient
confidence in the authentic product and harm the business of
companies such as ours. If our products were to be the subject of
counterfeits, we could incur substantial reputational and financial
harm.

We have recently grown our business and will need to further
increase the size and complexity of our organization in the future,
and we may experience difficulties in managing our growth and
executing our growth strategy.

Our management and personnel, systems and facilities currently
in place may not be adequate to support our business plan and
future growth. With the initiation of Phase 3 clinical trials for
Epidiolex in parallel with completion of our program of Phase 3
clinical trials for Sativex, coupled with the decision to promote
and market in the US the product candidates for with we receive
marketing approval from FDA, we have increased our number of
full-time employees from 194 on 30 September 2013 to 369 as of 30
September 2015, primarily because we are conducting all of our
Phase 2 and 3 clinical trials of Epidiolex and our other product
candidates ourselves and establishing a commercial organization and
our commercial infrastructure. As a result of these activities the
complexity of our business operations has substantially increased.
We will need to further expand our scientific, sales and marketing,
managerial, operational, financial and other resources to support
our planned research, development and commercialization
activities.

Our need to effectively manage our operations, growth and
various projects requires that we:

In addition, historically, we have utilized and continue to
utilize the services of part-time outside consultants and
contractors to perform a number of tasks for us, including tasks
related to compliance programs, clinical trial management,
regulatory affairs, formulation development and other drug
development functions. Our growth strategy may also entail
expanding our use of consultants and contractors to implement these
and other tasks going forward. Because we rely on consultants and
contractors for certain functions of our business, we will need to
be able to effectively manage these consultants and contractors to
ensure that they successfully carry out their contractual
obligations and meet expected deadlines. There can be no assurance
that we will be able to manage our existing consultants and
contractors or find other competent outside expertise, as needed,
on economically reasonable terms, or at all. If we are not able to
effectively expand our organization by hiring new employees and
expanding our use of consultants and contractors, we may be unable
to successfully implement the tasks necessary to effectively
execute on our planned research, development and commercialization
activities and, accordingly, may not achieve our research,
development and commercialization goals.

We depend upon our key personnel and our ability to attract and
retain employees.

Our future growth and success depend on our ability to recruit,
retain, manage and motivate our employees. The loss of the services
of any member of our senior management, including our Chairman, Dr.
Geoffrey Guy, our Chief Executive Officer, Justin Gover and our
Chief Medical Officer, Dr. Stephen Wright, or the inability to hire
or retain experienced management personnel could adversely affect
our ability to execute our business plan and harm our operating
results. Because of the specialized scientific and managerial
nature of our business, we rely heavily on our ability to attract
and retain qualified scientific, technical and managerial
personnel. The competition for qualified personnel in the
pharmaceutical field is intense. Due to this intense competition,
we may be unable to continue to attract and retain qualified
personnel necessary for the development of our business or to
recruit suitable replacement personnel.

Our employees may engage in misconduct or other improper
activities, including noncompliance with regulatory standards and
requirements.

We are exposed to the risk of employee fraud or other
misconduct. Misconduct by employees could include intentional
failures to comply with FDA regulations, provide accurate
information to the FDA, comply with applicable manufacturing
standards, comply with other federal and state laws and
regulations, report information or data accurately or disclose
unauthorized activities to us. Employee misconduct could also
involve the improper use of information obtained in the course of
clinical trials, or illegal misappropriation of drug product, which
could result in serious harm to our reputation. We have adopted a
Code of Business Conduct and Ethics, but it is not always possible
to identify and deter employee misconduct, and the precautions we
take to detect and prevent this activity may not be effective in
controlling unknown or unmanaged risks or losses or in protecting
us from governmental investigations or other actions or lawsuits
stemming from a failure to be in compliance with such laws or
regulations. If any such actions are instituted against us, and we
are not successful in defending ourselves or asserting our rights,
those actions could have a significant impact on our business,
including the imposition of significant fines or other
sanctions.

If we are unable to use net operating loss carry-forwards and
certain built-in losses to reduce future tax payments or benefit
from favorable tax legislation, our business, results of operations
and financial condition may be adversely affected.

As a U.K. resident trading company, we are predominantly subject
to U.K. corporate taxation. At September 30, 2015, we had
cumulative carry-forward tax losses of £74.0 million, available to
offset against future profits. The majority of these tax loss
attributes have not been recognized on our balance sheet at
September 30, 2015. Additionally, as we carry out extensive
research and development activities in the U.K., we benefit from
the U.K. research and development tax credit regime for small and
medium sized companies, whereby our principal research subsidiary,
GW Research Ltd., is able to surrender a portion of available
losses that arise from research and development activity for a
refundable credit of up to approximately 33.4% of the eligible
research and development expenditure. We may also benefit in the
future from the UK’s "patent box" regime, which would allow certain
profits attributable to revenue from patented products to be taxed
at a lower rate than other profits that over time will be reduced
to 10%. When taken in combination with our available carry-forward
tax losses and the enhanced relief available on our research and
development expenditure, we expect that this may result in a
long-term low rate of corporation tax. If, however, we are unable
to generate sufficient future taxable profits, or implement
feasible tax planning strategies to utilize our carry-forward
losses, or there are unexpected adverse changes to the U.K.
research and development tax credit regime or "patent box" regime,
or we are unable to qualify for such advantageous tax legislation,
our business, results of operations and financial condition may be
adversely affected.

We are subject to the U.K. Bribery Act, the U.S. Foreign Corrupt
Practices Act and other anti-corruption laws, as well as export
control laws, customs laws, sanctions laws and other laws governing
our operations. If we fail to comply with these laws, we could be
subject to civil or criminal penalties, other remedial measures,
and legal expenses, which could adversely affect our business,
results of operations and financial condition.

Our operations are subject to anti-corruption laws, including
the U.K. Bribery Act 2010, or Bribery Act, the U.S. Foreign Corrupt
Practices Act, or FCPA, and other anti-corruption laws that apply
in countries where we do business. The Bribery Act, FCPA and these
other laws generally prohibit us and our employees and
intermediaries from bribing, being bribed or making other
prohibited payments to government officials or other persons to
obtain or retain business or gain some other business advantage. We
and our commercial partners operate in a number of jurisdictions
that pose a high risk of potential Bribery Act or FCPA violations,
and we participate in collaborations and relationships with third
parties whose actions could potentially subject us to liability
under the Bribery Act, FCPA or local anti-corruption laws. In
addition, we cannot predict the nature, scope or effect of future
regulatory requirements to which our international operations might
be subject or the manner in which existing laws might be
administered or interpreted.

We are also subject to other laws and regulations governing our
international operations, including regulations administered by the
governments of the United Kingdom and the United States, and
authorities in the European Union, including applicable export
control regulations, economic sanctions on countries and persons,
customs requirements and currency exchange regulations,
collectively referred to as the Trade Control laws.

However, there is no assurance that we will be completely
effective in ensuring our compliance with all applicable
anti-corruption laws, including the Bribery Act, the FCPA or other
legal requirements, including Trade Control laws. If we are not in
compliance with the Bribery Act, the FCPA and other anti-corruption
laws or Trade Control laws, we may be subject to criminal and civil
penalties, disgorgement and other sanctions and remedial measures,
and legal expenses, which could have an adverse impact on our
business, financial condition, results of operations and liquidity.
Likewise, any investigation of any potential violations of the
Bribery Act, the FCPA, other anti-corruption laws or Trade Control
laws by U.K., U.S. or other authorities could also have an adverse
impact on our reputation, our business, results of operations and
financial condition.

Failure of our information technology systems could
significantly disrupt the operation of our business.

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