Why are Shares of GW Pharmaceuticals (GWPH) Up 15% in 2020?

GW Pharmaceuticals PLC (GWPH) stocks rallied this week after the company released preliminary Q4 results that exceeded forecasts.

The driving force behind the GWPH’s performance came from better-than-expected sales of the company’s flagship product Epidiolex, the cannabidiol (CBD)-based drug used to treat epilepsy, Lennox-Gastaut and Dravet syndromes. 

Thus far, Epidiolex is the only CBD-based pharmaceutical approved by the FDA. Of the company’s $108 million in fourth quarter sales, $104 million of that came from Epidiolex sales.

GW Pharmaceuticals expects to report $309 million in revenue for the entire year, exceeding analysts’ expectations. Comparatively, GW reported just $13 million in revenue from 2018. U.S. shares of GWPH shot up 7.4% to $115.44 in recent activity.

“Our fourth quarter and full year results for 2019 reflect an exceptional launch year for Epidiolex. Our goal in 2020 is not only to continue to drive Epidiolex growth, but also to leverage our world leadership in cannabinoid science to advance our pipeline.” said Justin Gover, CEO of GW Pharmaceuticals.

GWPH continues to drive revenue growth for Epidiolex as it looks to increase availability of the drug for patients in the United States, while working with both government and commercial payers.

The company also noted having $536 million in cash and cash equivalents as of Dec. 31, 2019, which is down from $555 million that it had back in Sep. 30, 2019.

Other products in the pipe

GW Pharmaceuticals also has plans to start multiple clinical programs surrounding nabiximols (which will be marketed under the brand name Sativex). Another cannabis-based drug, Sativex could be used in the United States for the possible treatment of multiple sclerosis, spinal cord injuries, and post-traumatic stress disorder.

The company is also looking at using cannabidivarin (CBDV) to treat autism. And it expects to begin a phase 2b study involving a possible treatment option for schizophrenia.

Bank of America Securities analyst Tazeen Ahmad held her Buy rating on GWPH with a $224 price objective. “In meetings this week, GW management assured Bank of America of a positive sales trajectory for its lead drug, Epidolex,” Ahmad said in a note.

Bank of America expects $475 million in 2020 sales from GW Pharmaceuticals.We note that patients’ access to Epidiolex continues to look positive with 97% of all U.S. insured patients with coverage of Epidiolex in LGS/DS [Lennox-Gastaut and Dravet syndromes],” Ahmad said.

The market for LGS and DS is expected to spread into the European Union this year with a planned launch in the U.K., and negotiations moving forward in Spain and Italy, the analyst said.

Also, GWPH is positioned to pioneer a new domestic market with its application to treat tuberous sclerosis complex — a disease estimated to affect between 40,000 and 80,000 Americans, she said.

In reference to the studies of nabiximols for multiple sclerosis that are expected to begin this year, and results from a trial of CBDV for autism are scheduled for release, Ahmad said, “We currently don’t assign standalone value for autism in our model. Positive data therefore in our view could provide upside potential near term.” 

Stay tuned for the release of GW Pharmaceuticals’ full results for 2019 and Q4 on Feb. 25, 2020.

GW Pharmaceuticals PLC ADR (GWPH) was trading at $118.52 per share on Friday morning, down $0.60 (-0.50%). Year-to-date, GWPH has declined N/A%, versus a 24.72% rise in the benchmark S&P 500 index during the same period.

About the Author: Eric Bowler

eric-bowlerEric Bowler is an accomplished journalist providing in-depth insights for more than two decades. Over the past several years his focus has been on the marijuana industry, with a special interest in cannabis growth stocks. His daily coverage of the industry keeps him on top of the key trends with the goal of helping investors make well-informed decisions.