Time To Buy GW Pharma, Roth Capital Says

• GW Pharmaceuticals PLC- ADR GWPH shares are down 20 percent in the last three months, and are trading significantly below their 52-week high of $133.98.
• Roth Capital Partners’ Elemer Piros reinitiated coverage of the company with a Buy rating and a price target of $130.
• The company’s Sativex for the treatment of spasticity in MS is approved in 27 countries, while Epidiolex is being test for three distinct seizure conditions, Piros said.

Analyst Elemer Piros mentioned, “GW engineered a variety of cannabis plants containing desired amounts of specific active ingredients for medicinal purposes. The company built a one-of-its-kind plant, where it grows the plants, extracts and purifies ingredients for clinical and commercial use.”

The company’s first drug, Sativex was approved in 27 countries outside the US for the treatment of spasticity in multiple sclerosis.

Cannabidiol, which is solder under the trade name Epidiolex, is an antiepileptic extract from the cannabis plant. This has shown to reduce seizure frequency by about 45 percent in about 47 percent patients in an expanded access program.

GW is conducting five different pivotal clinical trials for three distinct seizure conditions. Results from the first four are expected in 1Q16.

Piros estimates Epidiolex to be priced at $36,000 per year in 2017 in the US and at $24,000 in Europe. A gradual ramp from 1 percent market share in the launch year could grow to 33 percent by 2022, translating to peak sales potential of about $3B.

“By 2024, we estimate that 73,000 patients (~10% of all children with epilepsy) would be treated with Epidiolex, which assumes a substantial off label use, justified by the experience in the expanded access program,” Piros said.

Various other cannabinoid derivatives are being tested in five different indications in the clinic, including glioma, schizophrenia, type-2 diabetes, perinatal asphyxia and adult epilepsy, the analyst added.