4 Reasons Why Leerink Is Bullish On GW Pharma

Leerink is taking a bullish stance on GW Pharmaceuticals PLC (ADR) GWPH, with a thesis centering around the company's lead drug Epidiolex; the drug Sativex; GW's involvement in the epilepsy market and its cannabinoid science platform.

The Analyst

Leerink's Marc Goodman initiated coverage of GW Pharmaceuticals with an Outperform rating and $185 price target. 

The Thesis

Leerink's thesis takes four factors into account, Goodman said in the initiation note. (See his track record here.)

They are: 

• The potential in Epidiolex, a CBD-based drug for the treatment of seizures associated with two rare and severe forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome. Earlier this year, Epidiolex became the first CBD-based drug approved by the FDA.
• Epidiolex could generate sales of $1.8 billion by 2026, the analyst said. 
• GW's second drug Sativex is also promising, Goodman said. Sativex is indicated for multiple sclerosis spasticity and is already approved and marketed in Europe and other countries.
• In the U.S., Sativex could be approved in 2021 and generate annual sales of $330 million by 2030, the analyst said. 

Focusing on epilepsy allows GW Pharmaceuticals to have high operating margins, and sales forecasts should translate into strong profits, Goodman said.

The company has a "deep cannabinoid science platform and proprietary know-how" to develop more cannabis-based drugs, the analyst said. 

Price Action

GW Pharmaceutical shares were down 1.39 percent at $130.34 at time of publication Wednesday.

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