With a market cap of $969 million, GW is the mj market veteran around since 1998 and public since 2001. It closed at $57.71 per share on Thursday, up 534.87% from the beginning of May. This seasoned lion of the pot space is 100% focused on prescription cannabinoid medicines and has a unique bent not just on THC but on CBD (the component of marijuana thought to be the most beneficial for health). The company has fantastic patents on its delivery mechanism and great distribution partners with companies like Novartis and Bayer.
Total revenue for the three months ending on December 31 was $12.4 million, compared to some $7.1 million the previous year, and following an offering of American Depositary Shares (ADSs) on the Nasdaq Global Market ending last month, GW raised total gross proceeds of $101.1 million into its growth war chest.
Sativex, approved in 25 markets world-wide, is GW's much-ballyhooed drug, now FDA-vetted and expected to roll out stateside in 2015--though it has not yet received final approval. This is the truest arrow in the company's quiver with potential to continued to disrupt the medical marijuana market.
"GW Pharma's lead product, Sativex, is very different from Marinol (dronabinol), which is synthetic THC," said Alan Brochstein, founder of 420 Investor, a marijuana stock subscription service. "Sativex, which is created in a standardized process from specific cannabis strains (real plants) with a consistent ratio of cannabidiol (CBD) and THC, has a specific delivery mechanism (oromucosal spray) and little or no psychotropic side effects. "
The delivery mechanism and the cannabinoid content differentiates Sativex from other medicinal applications of the narcotic or its ersatz impostors.
In his January 13 analyst report for Canaccord, Ritu Baral reiterated his buy position and raised the price target to $65 on increased confidence in the GW cannabinoid platform.
"We think Sativex could be a key add-on Tx [therapy] for moderate/severe cancer pain and expect Ph3 data due mid-2014 to be positive," Baral wrote. "We estimate peak sales in the U.S. and E.U. of $2+B."
There are also untapped applications for this drug, with the opportunity for Sativex to be used in multiple sclerosis spasticity, for which it is already approved in the EU.
To boot, the future looks bright, with the company's Epidiolex marijuana drug (which treats epilepsy) given FDA orphan status: that means it has seven years of exclusivity to test the drug in clinical trials. A one trick pony, this company is not. This drug is set to hit market in 2019 and there are plans for the company's expansion in anticipation of Sativex U.S. approval and pediatric epilepsy trials.
"Our successful U.S. follow-on offering in early January raised $101 million and reflects excitement regarding GW's childhood epilepsy program, said GW CEO Justin Gover in the company's February 5 earnings report. "We believe that our lead epilepsy product candidate, Epidiolex, has the potential to meet significant unmet needs in the treatment of orphan childhood epilepsy syndromes such as Dravet syndrome and Lennox-Gastaut syndrome. With the new funds raised, we have the financial strength to accelerate this development program whilst retaining global commercial rights."
In fact, a new international study led by researchers from UCSF Benioff Children's Hospital is evaluating whether purified cannabinoid is an effective way to treat pediatric epilepsy.
Epidiolex is a purified cannabinoid that comes in liquid form without any THC. Epidiolex is still considered a Schedule 1 drug substance by the FDA, but pending FDA approval following a study of 150 patients across six centers, GW will launch the drug at four additional institutions this year.
CBD's role as an anticonvulsant can be revolutionary in treating children with epilepsy and has the potential to be more effective than other anti-epileptic drugs on the market.
But there's a measured dose of skepticism and need for more research to be developed on Epidiolex, but with the potential upside it should not be taken out of the mix.
"My hunch after working with many epileptics is that any single solution will only work for a cross section of the population and we are not at a sophisticated enough stage of research where we should be eliminating possibilities and options for treatments," Said Mimi Peleg, director of large scale training at MECHKAR, the Israeli government's state-run medical cannabis distribution center in. "We will be studying all of this extensively in Israel."
Roberta Cilio, a pediatric and neonatal epileptologist who is leading the Epidiolex study at UCSF, said this option is important given that a high number of children do not respond to current drugs on the market; Dravet syndrome and Lennox-Gastaut syndrome are particularly resistant. Finding the right drug for children is particularly difficult, because it needs to be effective but also not impact brain developement, Cilio said.
That's not to encourage expedited excitement.
"There is a lot of excitement out there for what's called medical marijuana," Cilio said. "Most of [the pieces of supporting evidence] are anecdotal reports. They say, 'CBD comes from a plant, so it's good.' But we have a lot to learn."
The results, if positive, could be a boost for GW.
It's very promising, but it;s the very beginning of the scientific approach," Cilio said. "I'm still optimistic, but I would like to call caution that we can't say this is the panacea."
The meticulous manner with which GW harvests its cannbis crop to produce the pharmaceuticals is also a huge value-add that bodes well for the future manufacturing of the company's drugs, according to Canaccord. GW has five U.K. plant facilities that together are responsible for all bulk plant substance, bulk drug substance and API production and final fill and finish. GW securely grows multiple strains indoors in tightly controlled discrete runs, each strain and run unique to a drug candidate, each producing one specific cannabinoid (which can then be mixed once purified).
GW, according to the Canaccord report, uses extreme control in the development of the raw material, the bulk drug substance and the bulk drug.
"GW crops are all cuttings from existing plans to ensure genetic uniformity, although they are still continuously monitored for mutations," Baral wrote. "The original strains were created by traditional horticultural crossing, not genetic modification."
--Written by Ross Kenneth Urken for MainStreet