(Corrects paragraph 12 to show DEA must make a decision within 90 days of FDA approving a medicine, instead of there is no time limit. The error first occurred in Update 2)
* FDA approves GW's drug to treat two severe forms of epilepsy
* Epidiolex's launch dependent on reclassification of the drug
By Tamara Mathias and Manas Mishra
June 25 (Reuters) - The U.S. Food and Drug Administration approved GW Pharmaceuticals Plc's epilepsy treatment on Monday, making it the first cannabis-based drug to win approval in the country.
The landmark approval could potentially open floodgates for more research into the medicinal properties of cannabis.
The drug's approval permits here its use in patients aged two years and older with Dravet Syndrome (DS) and Lennox-Gastaut Syndrome (LGS), rare childhood-onset forms of epilepsy that are among the most resistant to treatment.
"This approval serves as a reminder that advancing sound development programs that properly evaluate active ingredients contained in marijuana can lead to important medical therapies" said FDA Commissioner Scott Gottlieb.
The drug, Epidiolex, is made up of cannabidiol (CBD), one of the hundreds of molecules found in the marijuana plant, and contains less than 0.1 percent of tetrahydrocannabinol (THC), the psychoactive component that makes people high.
GW Pharma grows its own supply of cannabis in specialized glass houses in the United Kingdom to ensure uniformity in the genetic composition of the plants, which are then processed into a liquid solution of CBD.
Although THC can induce paranoia, anxiety and hallucinations, CBD has the opposite effects and has been cited by scientists as a potential treatment for mental health issues.
While supporters of legalizing marijuana say the decision is a step in the right direction, businesses reliant on the plant must contend with the federal government's ban on its use in all forms.
Based on the potential for abuse, the Drug Enforcement Administration (DEA) categorizes chemicals into five schedules, with Schedule 1 substances - like marijuana and heroin - considered the most deadly, and deemed to have no medical benefit whatsoever.
As a result, Epidiolex's launch remains at the discretion of the DEA which must now evaluate the drug and consider reclassifying it as a substance that has medical properties, which would allow GW to begin selling it.
GW said it expects the reclassifying to occur within 90 days.
"If FDA approves something as a medicine we then look into it and begin our own ... analysis," DEA Special Agent Wade Sparks told Reuters ahead of the FDA's decision. "We'll announce it when we're ready, however it has to be within 90 days of the FDA approving it as a medicine."
While Monday's approval makes Epidiolex the first cannabinoid-based prescription medicine approved in the United States, drugs with a synthetic version of molecules derived from marijuana have been approved.
In 1985, the FDA signed off on Marinol, which contains a synthetic version of THC, to treat loss of appetite in people with AIDS.
GW said it had not yet set a price for the drug, and it would work with insurance providers in the coming weeks to ensure that the medicine would be covered.
The company's Nasdaq-listed shares marginally fell in afternoon trading. The stock has run up nearly 50 percent in the past 12 months.
Most patients with LGS and Dravet syndrome require multiple seizure medications and the majority are resistant to currently approved anti-epileptic drugs.
The two epilepsy forms are also severe and associated with high rates of mortality. Some LGS patients have to wear helmets to avoid brain injuries from "drop seizures", where muscles suddenly become limp and cause standing patients to crash to the ground.
Epidiolex would also be the first approved treatment for Dravet syndrome patients, treatments for which are currently limited to a combination of seizure medication and drugs to prevent emergencies.
Shares of Zogenix Inc, which is also developing a treatment for the disorder, were down 3.2 percent. (Reporting by Tamara Mathias and Manas Mishra in Bengaluru; Editing by Shailesh Kuber)