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Why GW Pharma's Epidiolex Results Could Shape The Future Of Cannabis-Based Therapeutics

Why GW Pharma's Epidiolex Results Could Shape The Future Of Cannabis-Based Therapeutics
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Pot Stocks, ETFs, Top News And Data From The Cannabis Industry This Week
Pot Stocks, ETFs, Top News And Data From The Cannabis Industry This Week
Institutional Top Ideas Series: Consonance Capital (Seeking Alpha)

Medical journal The Lancet published an article Wednesday that could mold the future of cannabis-derived therapeutics.

The piece in question featured results from GW Pharmaceuticals PLC- ADR (NASDAQ: GWPH) and Greenwich Biosciences’ Phase 3 study of Epidiolex — an oral cannabidiol solution — in patients with treatment-resistant Lennox-Gastaut syndrome, or LGS, a rare form of childhood-onset epilepsy.

The reason why this announcement matters is Epidiolex’s potential to become the first in a new category of anti-epileptic drugs based on a pharmaceutical formulation of purified CBD, a non-psychoactive component present in marijuana, hemp and hops plants.

Per the study, 44 percent of patients using Epidiolex to treat highly treatment-resistant LGS exhibited a significant reduction in the frequency of drop seizures, a type of seizure that often results in the person falling down or "dropping." The tolerability and safety profiles were in line with previous studies.

GW Pleased With 'Breakthrough' Results

“We are extremely pleased with the publication of the results from our Lennox-Gastaut study. This follows on the results from our Dravet syndrome study, which was published in the New England Journal of Medicine last year. It's good to see the results of our studies published on the top level journals [of medicine],” Stephen Schultz, vice president of investor relations at GW Pharmaceuticals, told Benzinga. “I think all of this is an indication of how important the medical community sees these results as, how breakthrough they are.”

“We know that there is a lot going on in the cannabis field right now. Our goal is pretty focused, and that is to provide additional options to patients and to physicians who desire an FDA-approved pure CBD medicine,” Schultz said. 

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The Medical Field's Changing View On Marijuana

“The results aren’t really news," said 420 Investor Alan Brochstein. "What’s actually more relevant is the fact that peer-reviewed medical journals are publishing cannabis-related results. I do agree that this bodes well for continuing evolution of the way the medical world views the potential for cannabinoids. It’s nice, but it’s not a huge driver for GW Pharma.”

The Epidiolex results show further progress in the medical and evidence-based use of cannabinoids, said Aras Azadian, CEO of Avicanna, the first cannabinoid-based therapeutics company to make it into Johnson & Johnson (NYSE: JNJ) Innovation's JLABS @ Toronto.

“This will help educate the medical community and help in convincing other clinicians to focus on cannabinoids as a possible treatment for other indications that it may be helpful for.”

Coming To Market Before July?

In December, the U.S. Food and Drug Administration accepted a new drug application for the use of Epidiolex in the treatment of LGS and Dravet syndrome, another form of rare childhood-onset epilepsy. The agency set a PDUFA goal date of June 27, 2018.

If approved, Americans could gain access to this cannabinoid-based medication before the end of the year. Europeans might also have this drug soon, as the European Medicines Agency is expected to decide on Epidolex early next year.

Schultz said the company is adding to the canon of marijuana research. 

“There has been a lack of scientific evidence [around cannabis-derived therapeutics], to say the least, and the clinical studies that we have run have been robust, well-controlled and are hopefully supportive of approvals, both in the United States and in Europe,” Schultz said.

Related Link: Cannabis Industry Group Announces National Standards, Starts With Marijuana Product Packaging And Labeling

420 Investor Warms Up To GW 

Last year, Brochstein, was somewhat “lukewarm” on GW Pharma’s stock, arguing it was going to be a “back-half story.” What he meant by this was that some delays would be seen in the product pipeline — and he was correct. 

As GW Pharma evolved, Brochstein started to “warm up on the stock.” So, is it a buy now?

“Going into 2018, I was very bullish on cannabis stocks from a trading perspective because of the California legalization, but had very little exposure to GW Pharmaceuticals, if any, because I thought that even if it went up, it wouldn’t spike as high as others,” Brochstein said.

After Attorney General Jeff Sessions rescinded the Cole Memo, Brochstein reconsidered his stance on GW Pharma.

“Since the announcement, I have sold out my positions in some of the more speculative names, and kept 5- or 6-percent exposure to GW Pharma,” Brochstein said. From an investment standpoint, Brochstein said he doesn’t like having a large position in companies with binary risk — meaning the drug can succeed or fail, but there is no midpoint.

"I think GW Pharma’s drug is going to be approved and it’s going to be very successful, though,” Brochstein said.

Unlike biotech stocks that sink after good news due to the need for capital, GW Pharma is well-funded, which increases its chances of success, he said. 

“I would like to see evidence of the rest of their pipeline progressing, but I’m cautiously optimistic about this story, and the valuation looks very reasonable." 

Image Credit: Javier Hasse

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