GW Pharmaceuticals (GWPH.Q) based in London, United Kingdom develops and markets innovative therapeutics from the company’s selection of cannabinoid products. They were one of the first ones in the game and have consistently been based around science and research rather than hype or big greenhouses. One of GW Pharma’s ( ) recent milestones was to secure approval from the Food and Drug Administration for Epidiolex.
Epidiolex CBD refers to a pharmaceutical formulation of purified and cannabis plant-derived cannabidiol. It remedies seizures related to Gastaut or Dravet Syndrome in individuals two years and above. The FDA has not approved any other marijuana plant in the past.
The US Drug Enforcement Administration classified Epidiolex as Schedule 5 controlled (lowest level) substance. It means verified medical use with low probability for abuse. The DEA rescheduling allowed the company to sell the first FDA-approved marijuana drug. GW Pharma management announced it will strive to make the prescription available within six weeks from the DEA rescheduling. As a result, company shares went up six percent and facilitated the rise of other weed stocks.
The UK cannabis firm’s market cap reached almost $4.2 billion. Investors hope Epidiolex will reap revenues. The company earned only $17 million within the previous 12 months. However, According to Goldman Sachs, the marijuana drug can generate more than $2 billion by 2025. In other words, the GW stock is cheap. A market research entity (Evaluate Pharma) predicts the therapeutic drug to earn approximately $1billion in 2022.
Here’s the negative outlook. Epidiolex will find it difficult to make $300 million in sales yearly. Consumers will still choose cannabidiol products available in many states. Besides, will insurance companies pay the cost of $32,500 annually for this drug. US-based Zogenix Incorporated introduced its own version of anti-epilepsy medication called ZX008. The drug hurdled third-phase testing. FDA approval for the Zogenix product will certainly affect Epidiolex. In this case, Epidiolex doubters have a good point.
The possibility is high that GW Pharma will earn regulatory sanction in Europe by early 2019. The biotech firm started formulating its sales structure in the region hoping for an approval. Europe presents a big potential for Epidiolex. Looking at all the scenarios, Epidiolex may reach peak sales of almost $1 billion after several years provided GW Pharma can help responsive patients in staying loyal to Epidiolex.
Epidiolex or Not
The 64-dollar question remains. Will people opt for Epidiolex or not? Even then, GW Pharma stocks have the capability to keep up. It will depend on performance as well as the company’s overall marketing campaign. Investors may not be too bullish on GW Pharma right now. In fact, other stocks look better choices in the cannabis market right now. However, some of the winning factors are that the company has robust sales in the United States and approval pending in Europe. This company still face numerous challenges and risks in the future. As always It’s worth observing the marketplace with marked interest and caution.