GW Pharmaceuticals (GWPH): Cowen Counts on ‘Wide Adoption’ for Epidiolex in Refractory Epilepsies

Cowen's Phil Nadeau joins the bullish conversation buzzing about GWPh's cannabis-based epilepsy drug after a unanimous nod from the FDA AdCom panel.


It’s a great week to be a GW Pharmaceuticals (NASDAQ:GWPH) investor. Lead cannabis-based epilepsy asset Epidiolex has everyone on the Street talking after scoring a 13-to-0 unanimous recommendation from the FDA’s Peripheral and Central Nervous System Drugs (PCNS) AdCom.

The agency has not pinpointed a single obstacle blocking the drug from winning a green light in Dravet syndrome (DS) and Lennox Gastaut syndrome (LGS) and Cowen analyst Phil Nadeau sees “little” risk to approval come Epidiolex’s June PFUDA date- with a nod “likely before” then. GWPH’s Epidiolex boasts a “compelling clinical profile,” one further highlighted by the FDA’s review that has Nadeau calling for “wide adoption” in refractory epilepsies.

Therefore, believing this drug maker is “undervalued for Epidiolex’s potential,” the analyst maintains an Outperform rating on GWPH stock with a $165 price target, which implies a 21% upside from current levels. (To watch Nadeau’s track record, click here)

Nadeau notes, “Our FDA consultants at Prevision Policy think that the FDA’s comments at the conclusion of the panel suggest that Epidiolex will be approved well before its June 27 PDUFA date. They note that the FDA’s Division of Neurology Products Director Billy Dunn closed the meeting in an unusual way, by responding to pleas for urgency from the open public hearing speakers. In Prevision’s estimation, Epidiolex is likely to be approved at least a month ahead of its June 27 PDUFA.”

“Some may question whether Epidiolex’s association with LFT elevations and the need for liver monitoring could impact Epidiolex’s commercial potential. We think these will not present any meaningful hurdle to adoption. As noted by presenting physicians during today’s discussion, liver monitoring is routinely conducted on refractory epilepsy patients, particularly those on valproate. Therefore liver monitoring for patients on Epidiolex will not meaningfully change the burden of care,” continues the analyst, who believes this drug is right “on track” to gain a positive label consistent with broad use.

Looking ahead, the analyst angles for an Epidiolex launch in September and $1.1 billion in U.S. revenue by 2022. Nadau forecasts roughly three-quarters of the drug’s domestic revenue will stem from use in refractory epilepsy patients that have not been diagnosed with either DS or LGS.

This drug maker is a strong favorite on Wall Street, according to TipRanks analytics. All 3 analysts polled in the last 3 months are bullish on GWPH stock. With a solid return potential of 31%, the stock’s consensus target price stands at $175.67.

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