What Do Zogenix Drug Study Results Mean For GW Pharmaceuticals' Epidiolex?

Zogenix, Inc. ZGNX shares jumped another 5.6 percent Monday morning after exploding higher by 172 percent Sept. 29 in the wake of positive data on anti-epileptic drug ZX008. Shares of GW Pharmaceuticals PLC-ADR GWPH plummeted 9.6 percent last Friday as well, and dropped another 2.3 percent Monday as investors see ZX008 as a potential threat to GW’s Epidiolex epilepsy treatment drug candidate.

According to Cantor Fitzgerald analyst Elemer Piros, those fears are ungrounded. In a recent note to clients, Piros said there is plenty of room in the market for more than one treatment for pediatric epilepsy.

“Our Epidiolex model estimates a peak market penetration of 33%, already anticipating share between other promising agents such as ZX008,” Piros said.

Piros said GW already enjoys a critical one-year lead in the battle for commercial market share. Zogenix is aggressively hoping to begin phase III trials by the end of the year.

Piros said over half of all epilepsy patients require multiple drug treatments to help control the condition, so GW investors should expect plenty of patient overlap with competitors such as Zogenix. In fact, as more competitors enter the market, combination therapies with Epidiolex will likely improve the efficacy and safety profile for patients, Piros wrote.

Piros said investors shouldn’t dismiss Epidiolex’s “outstanding” trial data, and Cantor Fitzgerald is not modifying its outlook for GW at all based on Zogenix’s results. The firm maintains an Overweight rating and $208 price target for GW Pharma. Piros said there is even more upside for the stock if the company ultimately expands its market overseas.

At time of publication early Monday afternoon, shares of Zogenix were up 10.98 percent at $38.90. Shares of GW Pharma were down 4.02 percent at $97.41.

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