GW Pharmaceuticals PLC-ADR GWPH opened higher by 8 percent Tuesday after posting positive results from its Phase 3 Epidiolex trial and second-quarter earnings beats.
Here’s what analysts are saying.
GW Pharma closed out its first full quarter of Epidiolex sales with $33.5 million in drug revenue — well above consensus forecasts between $15 million and $16 million.
Epidiolex is the first prescription, plant-derived cannabinoid medicine in the U.S.
“[E]xpectations for this launch have been sky high — and GWPH continues to deliver,” Piper Jaffray analysts Danielle Brill and Nirav Shelat wrote in a note. “We think the growth trajectory will continue over the coming quarters given expected EU launch, ongoing dose-titrations, increasing penetration into adult population, transition of remaining expanded access program patients to commercial product, and expansion into new indications.”
Management assured more stable growth moving forward now that the drug has addressed pent-up demand and achieved coverage expansion. Medicaid, UnitedHealth Group Inc UNH, OptumRx and Prime enabled access.
“Though management is prudently cautioning the Street to consider an early bolus effect (which is understandably difficult to quantify at this early stage), we believe Epidiolex is on track to come in north of $150M in its first full year (with off label use being a major potential swing factor), easily exceeding our initial/Street expectations,” JPMorgan analysts Cory Kasimov and Matthew Holt wrote.
Piper Jaffray anticipates U.S. approval of Epidiolex for tuberous sclerosis complex (TSC) and expects payers to loosen use restrictions. By Bank of America Merrill Lynch estimates, TSC prescriptions are worth $25 per share.
The indication expansion would compound geographic growth as GW Pharma launches in five major European markets. Bank of America expects the international rollout by the end of the year.
JPMorgan also sees upside potential in “upward bias to longer term off-label epilepsy sales.”
- Bank of America maintained a Buy rating with a $218 price target;
- JPMorgan maintained an Overweight rating and raised its target from $180 to $215; and
- Piper Jaffray maintained an Overweight rating with a $210 target.
At time of publication, the stock traded around $184.86 per share.
Photo courtesy of GW Pharmaceuticals.
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