Shares of GW Pharmaceuticals PLC- ADR (GWPH) took off on Monday after positive Phase 3 trial data was released for its drug Epidiolex, which treats Dravet syndrome. After shooting up about 90% in premarket trade, shares were briefly up as much as 120% in morning trading after the news.
Overnight, the company’s valuation went from about $900 million to $1.8 billion. That’s quite a payday for investors. It’s also good news for marijuana stocks in general, since Epidiolex is a cannabidiol, or cannabis-based drug.
According to the Dravet Foundation, Dravet syndrome, or Myoclonic Epilepsy of Infancy (SMEI) is:
“…a rare and catastrophic form of intractable epilepsy that begins in infancy, with an estimated incidence rate of 1:16,000 to 1:21,000 [1]. It is a debilitating, life-long condition that can severely impede the quality of life of the patient. Patients experience frequent seizures, poor seizure control, and developmental delays. Initial seizures are most often prolonged events and in the second year of life other seizure types begin to emerge.”
In other words, like many rare diseases, it has a horrible set of symptoms.
Many problems in the past surrounding so-called “orphan drugs” with very small patient populations have stemmed from the lack of economic incentive for drug companies to develop treatments.
The Food and Drug Administration took this challenge on directly, encouraging companies like GWPH to develop drugs like Epidiolex through its Office of Orphan Products Development (OOPD).
From its website:
“OOPD provides incentives for sponsors to develop products for rare diseases. The program has successfully enabled the development and marketing of more than 400 drugs and biologic products for rare diseases since 1983. In contrast, fewer than 10 such products supported by industry came to market between 1973 and 1983.”
GWPH, Marijuana Stocks and Study Results
GWPH highlights the need for marijuana stocks to be taken seriously. We can see the astounding results of what a cannabis-based drug can do in this case, and the epilepsy-reducing qualities of marijuana have been touted before, anecdotally.
In GW Pharmaceuticals’ 120-patient trial, Epidiolex achieved the primary endpoint of showing significant reductions in convulsive seizures over the duration of the treatment when compared to a placebo.
Monthly convulsive seizures fell 39% for patients on Epidiolex, compared to 13% for the placebo.
It’s important to note that Epidiolex is not approved to treat Dravet syndrome yet, and there are still no FDA-approved treatments for it. But GWPH is a step closer to becoming the first, and will “request a pre-NDA meeting with the FDA to discuss our proposed regulatory submission,” according to CEO Justin Grover.
The breakthrough shows the very real potential for marijuana stocks to provide big returns going forward, and it caught the eye of at least one other exec in the industry.
Derek Peterson is the CEO of Terra Tech Corp (TRTC), the first publicly traded cannabis company in the U.S. Says Peterson,
“It’s exciting to see that clinical data is continuing to show what many patients have been experiencing personally — that cannabis-based medicines are effective. It’s also encouraging to see these developments lead to economic value for their shareholders. The entire industry is growing quickly, and this is another positive step.”
Not only is GWPH stock skyrocketing this morning, it’s doing so on absurd volume. At 10:08 a.m., the “relative volume” for GW Pharmaceuticals stock was 82.13, meaning in the first 48 minutes of trading, the volume of GWPH shares being traded was 82 times higher than normal.
InvestorPlace Feature Writer James Brumley highlighted GW Pharmaceuticals stock in a piece last month as one of the marijuana stocks that was “actually for real” in today’s market. It appears he was correct.
GWPH short sellers are surely feeling the pain on Monday, and through the end of February, there were quite a few on Wall Street with a negative view of the stock.
On Feb. 29, short interest was 2.2 million shares, or 5.1 times the average daily volume of the stock.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
