There’s a new FDA-approved cannabis-based medicine on the scene. Today, the U.S. regulators green-lighted GW Pharma’s (NASDAQ:GWPH) EPIDIOLEX for the treatment of two rare and severe forms of epilepsy, Lennox-Gastaut syndrome (LGS) and Dravet syndrome, for patients from the age of two. EPIDIOLEX is the first prescription pharmaceutical formulation of highly-purified, plant-derived cannabidiol (CBD), a cannabinoid lacking the high associated with marijuana, and the first in a new category of anti-epileptic drugs.
In reaction, Cantor analyst Elemer Piros reiterates an Overweight rating on GWPH stock, while raising the price target to $235 (from $205), which implies an upside of 62% from current levels. (To watch Piros’ track record, click here)
Piros wrote, “We are encouraged that EPIDIOLEX did not receive a formal Boxed Warning. The label highlights the limited association with use of CBD and alanine transaminase (ALT) elevations, which did not lead to a Boxed Warning. We remind investors that during the AdComm meeting, the Committee highlighted the drug led to no cases of Hy’s Law and showed limited abuse potential.”
“We have rolled forward our NPV model to begin in FY20 instead of FY19. We model $136 million in 2019E EPIDIOLEX U.S. and EU sales. We estimate the company will burn $213 million in the next 12-months. Following these changes, our valuation of the company increases to $235/ADS from $205,” the analyst added.
Aside from this rating, GWPH has only received one other analyst rating in the last three months. Five-star Cowen analyst Phil Nadeau has a bullish Buy rating on GWPH.
Founded in 1998, GW is a biopharmaceutical company focused on discovering, developing and commercializing novel therapeutics from its proprietary cannabinoid product platform in a broad range of disease areas. The Company has submitted a regulatory application in Europe for the adjunctive treatment of LGS and Dravet syndrome. Additionally, the company will initiate a cannabidivarin (CBDV) investigator-led placebo controlled trial in autism in 3Q18 and a CBDV open label trial in Rett syndrome in 4Q18.