GW Pharma Set To Fly High: Goldman Sachs Starts Coverage At Buy, Sees 42% Upside

The lead candidate of GW Pharmaceuticals PLC- ADR GWPH, Epidiolex, has yielded positive results in three Phase III studies in two severe orphan epilepsies.

“We anticipate a solid launch trajectory,” Goldman Sachs’ Salveen Richter said in a report. He initiated coverage of the company with a Buy rating and a price target of $189.

GW Pharma is focused on cannabis-based therapies in central nervous system disorders. The company’s lead asset Epidiolex for Dravet Syndrome [DS] and Lennox-Gastaut Syndrome [LGS] is now de-risked with positive data from three Phase 11 studies.

“We anticipate a solid launch trajectory (>1K US patient bolus) with widespread off-label use in nonDS/LGS epilepsies – we model $1.6bn in WW sales, of which 51% is derived from US pediatric off-label use (assumes sales cliff in 2026 and 2028),” analyst Richter wrote.

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Catalysts To Drive Shares

Richter stated the following pipeline catalysts that could lend upside to GW Pharma’s shares:

1. Publication of Epidiolex Phase III study in DS in a top-tier medical journal in Q4
2. Data from the American Epilepsy Society meeting could reinforce the clinical and safety profile
3. Epidiolex Phase III study initiation in infantile spasms in Q4
4. Sativex Phase II data in cerebral palsy spasticity and THC:CBD Phase IIa data in recurrent glioblastoma in Q4
5. Epidiolex NDA submission in the first half of 2017
6. CBDV Phase II data in adult focal seizures/epilepsy in Q1 of 2017
7. AAN data update
8. Initiation of CBDV Phase II study in autism spectrum disorders in the first half of 2017
9. Epidiolex Phase III dose-ranging Dravet study data in 2017
10. Epidiolex Phase III data in tuberous sclerosis complex in the back half of 2017

“Per KOL feedback, there is substantial interest from the medical community and patients for Epidiolex in all treatment-resistant epilepsies (TREs) in pediatric and adult populations,” the analyst noted.

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