Autism Patients Could Be Helped with Cannabis

NEW YORK (TheStreet) -- Analysts may be underestimating the potential of GW Pharmaceuticals (GWPH). Five analysts are covering the company, the most recent initiation coming from Morgan Stanley. The average price target is $86 and the stock currently trades at $71.

GW Pharmaceuticals is known for its flagship drug Sativex, which combines both the THC and the CBD extracts from the cannabis plant for medicinal purposes. Sativex is delivered as a mouth spray and has been approved for use in countries like Great Britain, Canada and Germany to name a few. It is considered to be the only mainstream pharmaceutical company to pursue cannabis testing and scientific trials. Solvay Pharmaceuticals produces Marinol, a THC only drug, which is approved by the FDA in the U.S. Solvay has done no studies since 2004.

The analysts are mostly excited about the use of GW's drug Epidiolex for pediatric epilepsy, specifically Dravet Syndrome and the patients that suffer from Lennox Gastaut syndrome. They are fairly small patient populations, roughly 5,000 Dravet patients in the U.S. and 15,000 LGS. However, there is little competition and the patients' needs are mostly unmet. So GW will own this market.

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The bigger potential market for GW Pharmaceuticals could be autism. PiperJaffrey analyst Josh Schimmer has noted that subsets of these diseases share similar features with epilepsy. He writes, "It's possible that some children have subclinical seizure activity that result in developmental disorders, and there are also extremely exciting anecdotes of autism patients who thrive after CBD therapy." According to the Center for Disease Control and Prevention, 1.5% of the children in the U.S. are diagnosed with ASD as of 2014, a huge patient population.

The Autism Research Institute has also made this connection. The found that some of the symptoms marijuana has improved in children with autism include anxiety, aggression, panic disorder, tantrums and self-injurious behavior. Martin Lee, author of Smoke Signals and founder of Project CBD said, "There's substantive body of preclinical research and some anecdotal stories. There's also some research from GW Pharmaceuticals on psychiatric disorders. It's not autism, but there are overlapping issues."

Lee is correct. GW Pharmaceutical has a Phase 2a trial underway for schizophrenia, but nothing for Autism. GW Pharmaceutical spokesman Mark Rogerson said, "I'm afraid we have no current research going on in this area. We are aware of the interest in cannabinoid medicines and autism and our plans may change in the future. But for the time being we have a very full clinical trials programme. We are only a small company in pharmaceuticals terms and regretfully, we have to make choices among therapeutic areas."

"The rationale for this novel hypothesis arises from the discovery that the endocannabinoid system is one of the most abundant physiological control systems in animals and humans," wrote the authors of a study from William Paterson University. Adding, "It is tempting to suggest the evaluation of A9-THC or other cannabinoids with reduced psychoactivity in irritability, tantrums and self-injurious behavior associated with autistic individuals. Our data provides a basis for further studies in evaluating the role of the cannabinoid and monoaminergic systems in the etiology of ASDs."

Last year a study out of Stanford University found signs to suggest compounds found in cannabis could help to treat autism. A 2011 study from the Second University of Naples wrote, "Our data indicate CB2 receptor as potential therapeutic target for the pharmacological management of the autism care."

On the anecdotal side, one mother founded The Unconventional Foundation for Autism when she discovered that medical marijuana helped her autistic son. A Brown University teacher Marie Myung-Ok Lee , author of Somebody's Daughter, documented her autistic son's response to using Marinol, a synthetic cannabis. She switched to an edible form of cannabis and then a tea version. She calls her experiment a qualified success. There's even Cannabis for Autism Facebook page with over 12,000 likes.

Established medical groups like the Epilepsy Foundation and the American Cancer Society have urged patients to be, well, patient and wait for studies and clinical trials. But desperately ill people have moved forward without the approval of these groups and have generated a grass roots campaign for various medicinal applications for cannabis. Autism could be the next patient population to revolt against traditional, established medical foundations.

If autistic parents think GW Pharmaceutical is the answer to improving their children's lives, even a low patient pricing of $15,000 could lead to half a billion dollars. If the pricing were on the high side of $250,000 then you're looking at a $9 billion benefit.

For now, the market cap is less than a billion and the company hasn't received U.S. drug approval. Nor have there been any large studies initiated, mostly small preclinical research and anecdotal evidence.

However, it was this anecdotal work that led to the pursuit of cannabis in treating pediatric epilepsy. If autistic children get relief from this drug, a grassroots effort by parents will drive a push for more studies and potentially a treatment.

Written by Debra Borchardt in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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