Cowen Remains Bullish on GW Pharmaceuticals PLC- ADR (GWPH) Despite Unsuccessful Phase 2 Trial in Focal Seizures

If you’ve been waiting patiently on the sidelines for a pullback in GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH), it’s here. The drug maker’s shares fell nearly 11% yesterday, after the company announced negative results with GWP42006 in adult patients with focal seizures. GWP42006’s primary cannabinoid is cannabidivarin or CBDV, a propyl analogue of CBD (Epidiolex).

However, Cowen analyst Phil Nadeau remains bullish on shares, reiterating an Outperform rating and price target of $165, which implies an upside of 41% from current levels. (To watch Nadeau’s track record. click here)

Nadeau wrote, “Despite its preclinical data suggesting the potential for improved efficacy over CBD, most investors were interested in CBDV primarily as a means by which GW could extend the commercial life of its epilepsy franchise beyond the expiration of the orphan exclusivities for CBD. In fact, few were confident in CBDV’s prospects for success in the Phase IIa, particularly given the trial’s relatively small size. In a physician and investor survey conducted during Cowen and Company’s Therapeutics conference in October 2017, only 14% of investors and 28% of physicians thought that the trial was more likely to succeed than fail. Therefore, while the data are a disappointment, they are not particularly surprising.”

“Our model did not contain any assumptions for revenue from GWP42006, and therefore we are making no changes to our estimates. Perhaps most striking is not the trial’s missed p-value, but rather the large reduction in seizure frequency seen in the placebo arm. There would seem to be some chance that this placebo effect has obscured a true treatment effect of GWP42006. GW will work to better understand the placebo response, and whether there is a better trial design to conduct and patient population in which to explore GWP42006’s potential impact on seizures,” the analyst continued.

Wall Street agrees with Nadeau that this drug maker is one to watch, as TipRanks analytics exhibit GWPH as a Strong Buy with 6 back-to-back Buy ratings in the last 12 months. With a return potential of 37%, the stock’s consensus target price stands at $160.60

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