[pro_ad_display_adzone id=”3818″] GW Pharmaceuticals (NASDAQ: GWPH) is having a busy month. In just a few weeks, the company has announced the initiation of study trials, received Orphan Drug Status to use cannabidiol on newborn babies and gotten a Notice of Allowance for a patent application for treating epilepsy with another of its cannabis based compounds. Not bad for a drug that is classified as schedule 1 meaning that the Drug Enforcement Agency (DEA) believes the drug has no currently accepted medical use and that it isn’t safe to use the drug under medical supervision. Perhaps the Federal Drug Administration (FDA) and U.S. Patent Office may want to call the DEA and nicely suggest a change? Meet for lunch and talk?
If you aren’t familiar with GW Pharmaceuticals, it is a London-based bio-pharmaceutical company that focuses on researching, developing and then commercializing treatments from its cannabinoid products derived from the cannabis or marijuana plant. (This contributor owns shares in GWPH). On April 21st, the company announced it was initiating its second Phase 3 clinical trial of its signature drug Epidiolex for the treatment of Dravet syndrome, which is a rare form of childhood epilepsy and tends to be treatment resistant. Typically when a drug gets to Phase 3, there is some effectiveness and the patient population is much bigger for the study and the study goes on for longer. It can also be considered a pre-marketing period as the company tries to see how consumers may respond to it.
WASHINGTON, DC – APRIL 22: Liza Smith of White Stone, Virginia, comforts her14-year-old Haley Smith who suffers from a severe form of epilepsy called Dravet Syndrome, as she listens during a news conference at the National Press Club April 22, 2015 in Washington, DC. U.S. Rep. Scott Perry (R-PA) discussed during the news conference his proposed Charlotte’s Web Medical Access Act to legalize therapeutic hemp and cannabidiol (CBD) by excluding them from the Controlled Substance Act. (Photo by Alex Wong/Getty Images),
“The start of our second pivotal Phase 3 clinical trial for Epidiolex in the treatment of Dravet syndrome marks another key milestone in our plan to submit a New Drug Application for Epidiolex to the FDA in mid-2016,” stated Justin Glover, CEO of GW Pharmaceuticals. GW also said it expects to initiate two more Phase 3 studies using the drug for Lennox-Gastaut syndrome, another form of epilepsy that rears its ugly head when a child is between the ages of two and six. A recent report from doctors using GW’s drug showed that 11 LGS patients saw their seizures drop by 55% at the end of 12 weeks. But it doesn’t work for all patients as 14 dropped out from treatment when there was no effect. GW is also looking at even more illnesses that Epidiolex can help including Tuberous Sclerosis Complex. TBS is a genetic disorder that causes multiple tumors and 75-90% of the patients experience seizures.
Then on April 24th, GW announced that it got an Orphan Drug Designation from the FDA to use Cannabidiol (CBD) to treat babies that suffer brain injuries when they are deprived of oxygen during the birthing process. It’s called neonatal hypoxic-ischemic encephalopathy and it happens in 1.5 to 2.8 per 1,000 births a year. GW developed an intravenous form of CBD and expects to submit an Investigational New Drug Application to the FDA in mid 2015 and start a Phase 1 study in the second half of the year. “This orphan drug designation for cannabidiol for the treatment of newborn children with neonatal hypoxic-ischemic encephalopathy follows several years of pre-clinical evaluation and we look forward to advancing a clinical development program in this important medical condition this year,” said Glover.
Then finally on Monday April 27th, GW announced that the U.S. Patent Office issued a Notice of Allowance for a patent application to cover the use of Cannabidivarin (CBDV) to treat epilepsy. There are 85 differently identified cannabinoids in the cannabis plant and CBDV has a slightly different molecular structure. For all the science wonks out there Mark Rogerson of GW said, “CBDV has its side-chain shortened by two methylene bridges (CH2 units).” Glad we cleared that up.
All of these announcements has continued to push the stock higher. It has increased by 40% in the past month alone. There are only six analysts covering the company according to Thomson One Analytics and four according to Yahoo YHOO -0.33%! Finance all with a Buy rating. However, things could take a turn for the worse when the company is expected to report its earnings on May 11th. The projected year over year growth in earnings per share for the second quarter ending March 15this -128%. A year ago, GW reported -$0.49 for the second quarter and this year its estimated the company will deliver -$1.12. If investors are in this company for the short term, they will be disappointed. They will only want to see headlines that say “beat estimates” or see huge sales figures.
However, many shareholders seem to understand that this is a long term hold. They are waiting for the day that all these cannabinoid drugs will be through their various testing phases and on the market shelf. They will look to the many off-label uses that doctors will recognize. They know the drug will be a darling of legislators that want medicinal marijuana to be more like traditional medicine.
If the company continues getting strong positive results from these studies, the stock will continue to move higher. Even if some patients aren’t helped, the ones the drugs do work on are patients that were getting no relief from any other treatments. A win win. It is one of the few marijuana stocks that is legitimate and delivers real results. So investors in GW should watch the earnings results, but focus on the study results – that’s what matters.