GW Pharmaceutical Gets Closer To Forcing FDA On Cannabis
Forbes – Debra Borchardt – 09/28/16
British biotech company GW Pharmaceuticalsannounced positive results on its latest Phase 3 clinical trial for its drug Epidiolex. The drug is cannabidiol-based and is used to treat children with Lennox-Gastaut syndrome, a rare form of childhood epilepsy.
The results from the test were very positive. Patients taking 20mg of Epidiolex saw their seizures on average drop 42% compared to a drop of 17% in patients taking a placebo. Patients taking 10mg of Epidiolex experienced a 37% drop in seizures versus the 17% drop in the placebo group.
The next step for GW Pharmaceuticals is to seek approval from the U.S. Food and Drug Administration or FDA for approval. The company said it expects to submit a New Drug Application with the FDA in the first half of 2017. If approved, it would be the first plant-derived cannabinoid drug in the U.S. to be approved.After the FDA approves a new drug application, the Drug Enforcement Administration (DEA) legally must reschedule within 90 days (per theImproving Regulatory Transparency for New Medical Therapies Act). So, Epidiolex would be rescheduled by DEA within 90 days, but overall marijuana would not be rescheduled.
This further complicates the rescheduling argument. How could the DEA declare Epidiolex, cannabinoid drug a medicine, but then still insist marijuana has no medicinal benefits? Of course, they do that now because the U.S. government has medical patents on marijuana and still declare it has no medicinal qualities.
GW Pharmaceutical stock is up 26% for the past year and was lately trading near $124. It shot up earlier this month when rumors swirled about the company’s buyout potential. Then a week after the stock popped 20% on the rumor, the chief medical officer Steven Wright sold 16,524 shares at $98.75. Wright informed the company in August that he planned to retire in May 2017, so he may have seen an opportune moment to sell his shares.
Cowen & Company analyst Phil Nadeau took the news to reiterate his price target of $135 and outperform rating on the stock. Nadeau is forecasting Epidiolex revenue, assuming approval, to be approximately $260MM for 2018, $570MM for 2019, and rising to $895MM by 2020. Nadeau wrote, “With three positive Ph. III trials, we expect Epidiolex to be approved during H1:18, and we project worldwide sales of $1.1B in 2021.”