CBD Drug Makers, Medical Cannabis Stocks Rally On GW Pharma's Big Buyout

Medical cannabis stocks and stocks of cannabinoid drug companies are rallying big time Wednesday, the catalyst being a multi-billion-dollar buyout in the space.

What Happened: GW Pharmaceuticals GWPH, which markets plant-derived cannabinoid epilepsy drug Epiodiolex, announced a deal to be bought by Jazz Pharmaceuticals JAZZ for $7.2 billion in cash and stock.

The Sympathy Move: The news has set in motion across-the-board strength in cannabinoid drug companies such as Corbus Pharmaceuticals Holdings Inc CRBP, Zynerba Pharmaceuticals Inc ZYNE, and Cara Therapeutics Inc CARA.

Corbus is a Phase 3 biopharma that is developing lenabasum, an oral, selective cannabinoid receptor type 2 agonist for indications such as systemic sclerosis, cystic fibrosis, dermatomyositis and systemic lupus erythematosus.

Zynerba's lead asset Zygel is a cannabidiol gel that is currently being evaluated for Fragile X syndrome, autism spectrum disorder in pediatric patients, 22q, and a heterogeneous group of rare and ultra-rare epilepsies known as developmental and epileptic encephalopathies.

Cara has in its pipeline a cannabinoid compound CR701, which is a synthetic cannabinoid receptor agonist being evaluated for the treatment of neuropathic pain, particularly for hyperalgesia and allodynia.

Related Link: CBD Vs. THC: The Science Behind The Most Popular Cannabinoids

Other companies with ties to the medical cannabis space such as Hexo Corp HEXO, Tilray Inc TLRY, and Aphria Inc APHA and Akerna Corp KERN, a technology company providing support function to cannabis companies by way of an enterprise resource planning system, are also partaking in the rally.

The strength is attributable to hopes that the sector may see more M&A down the line, with some of these companies likely to be attractive acquisition targets.

The Price Action: In premarket trading Wednesday:

• Corbus shares were up 12.02% to $2.89.
• Zynerba was jumping 16.29% to $4.14.
• Cara shares were rallying 5.06% to $19.74.
• Hexo was moving up 3.37% to $7.36.
• Tilray shares was jumping 8.64% to $25.52.
• Aphria was gaining 5.43% to $15.44.
• Akerna was advancing 3.39% to $7.33.