GW Pharmaceuticals (GWPH) Lead Drug’s Green Light Just Around the Corner? Cowen Joins the Conversation

On back of yesterday's positive briefing documents, Cowen's Phil Nadeau roots for FDA approval.

GW Pharmaceuticals (NASDAQ:GWPH) shares jumped 11% yesterday and continue to rise another 2% this morning on the heels of encouraging benign briefing documents the FDA posted in anticipation for tomorrow’s big AdCom. With GWPH’s lead cannabis-based epilepsy asset Epidiolex in the spotlight, odds are looking good for a nod in Dravet syndrome (DS) and Lennox-Gastaut syndrome (LGS).

Cowen analyst Phil Nadeau saw “few surprises” here in the agency’s evaluation, and believes one bullish note is clear: GWPH’s lead drug’s benefit-risk profile points to a forthcoming “clear endorsement” of approval.

As such, the analyst reiterates an Outperform rating on GWPH stock with a $165 price target, which implies a 20% upside from current levels. (To watch Nadeau’s track record, click here)

“Liver monitoring may be required, but this is common in the care of epilepsy and we would not expect it to impact Epidiolex’s commercial potential,” notes Nadeau, who cheers that yesterday’s briefing documents stand “among the most benign we can recall.” No substantial new safety nor efficacy apprehensions were brought to light in the FDA’s review of Epidiolex, and this leads Nadeau to “anticipate wide adoption” ahead.

Bottom line, “For many months investors had been concerned by Epidiolex’s interaction with clobazam, while the FDA reviewers treated this as a non-issue. The FDA is inclined to subject Epidiolex to liver monitoring requirements but appears to be suggesting potential post-marketing studies that could ease this requirement. Regardless of the outcome of these studies, we believe liver monitoring will not be a significant barrier to adoption or use as refractory epilepsy patients are commonly subject to liver monitoring for drugs they are already taking such as valproate. We also find it important that the FDA has officially declared Epidiolex to have negligible abuse potential. This should aide CBD in being efficiently rescheduled by the DEA following FDA approval,” Nadeau concludes.

For 2019, the analyst forecasts the cannabis-based epilepsy asset can bring in $160 million to GWPH’s table, $540 million by 2020, $1.1 billion by 2021, and $1.3 billion by 2022.

According to TipRanks analytics, GWPH is a strong bullish favorite on the Street, with a unanimous Buy from all 3 analysts polled in the last 3 months. With a solid return potential of nearly 28%, the stock’s consensus target price stands at $171.33.  

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