GW Pharmaceuticals' FDA Win Reinforces BofA's Bullish Thesis

The U.S. Food and Drug Administration approval of GW Pharmaceuticals PLC GWPH's epidiolex therapy for the treatment of seizures was expected — and reinforces the bullish case for owning the stock, according to Bank of America Merrill Lynch. 

The Analyst

Bank of America's Tazeen Ahmad maintained a Buy rating on GW Pharmaceuticals with a price target lifted from $170 to $200.

The Thesis

The FDA's approval of epidiolex was expected after an April advisory committee vote that included encouraging language, Ahmad said in a note. GW Pharma's sales team is already in place to proceed with targeting 68 different geographic regions, the analyst said. 

BofA is modeling for 100-percent likelihood of Epidiolex's success.

Proprietary and firsthand checks with doctors over the last three years confirms "high pent-up demand" and supports expectations for peak U.S. sales of $2.4 billion, Ahmad said. 

GW has five clinical catalysts, the analyst said:

• DEA rescheduling.
• Data from the second Phase 3 trial with epidiolex in Dravet syndrome in the bottom half of 2018.
• Data from the Phase 1 trial of CBDV in seizures associated with autism.
• An EMA decision on MAA for epidiolex in the first quarter of 2019.
• Data from a Phase 3 trial with epidiolex in tuberous sclerosis complex in the first half of 2019.

Price Action

Shares of GW Pharmaceuticals were trading higher by 1.3 percent before the close Tuesday. 

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