GW Pharmaceuticals PLC- ADR Is a First-Rate Marijuana Stock (GWPH)

There are only a handful of names in the medical marijuana business that have proven to be plenty legitimate. One of them has arguably made its way to the head of the class: GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH).

GW Pharmaceuticals PLC- ADR GWPH stock marijuana

Three and a half years ago, yours truly commented that the then-red-hot cluster of marijuana stocks would soon fizzle out. In short, there was more bark than bite to the buzz. Sure enough, Greengro Technologies Inc (OTCMKTS:GRNH), Medical Marijuana Inc (OTCMKTS:MJNA), Growlife Inc (OTCMKTS:PHOT) and Hemp Inc (OTCMKTS:HEMP) — the four names I specifically mentioned — are all trading lower now than they were then.

The stumbling block? Traders were gambling on a premise rather than investing in a business. And the actual business of recreational or medical marijuana isn’t easy.

But GWPH stock continues to make progress. It’s up 11% today and within sight of new highs on the heels of some major late-stage success with one of the key drugs in its pipeline.

What Is GW Pharmaceuticals?

In some regards, it paints a misleading picture to lump GWPH in with the aforementioned names like Growlife and Medical Marijuana. Most of the more recognizable names in the group have targeted the “self-medicated” and recreational users, and have fiscally not done well doing so.

GW Pharmaceuticals, conversely, is a legitimate pharmaceutical developer that just to happens to use cannabidiol as the basis for much of the R&D. Cannabidiol is a cannabis-based compound that provides the medical upside of marijuana, but without causing a “high.”

The need for such a cannabis derivative is great. Although the medicinal benefits of cannabis are largely appreciated, to drive a medical benefit, it needs to be delivered in sizable doses. Were cannabidiol not low-THC or THC-free, the necessary dosing could create a maddening psychoactive effect.

One of GW Pharmaceuticals’ therapies — Sativex — has been approved in the United Kingdom as a treatment for symptoms of multiple sclerosis, and all of the items in its robust pipeline that are following the FDA’s normal approval path. Its Epediolex, in fact, has been deemed an “orphan drug” for three different ailments.

Securing an orphan drug designation doesn’t inherently guarantee approval. But it does indicate the Food and Drug Administration recognizes the dire need for such a treatment.

Epediolex Further Validated

Epediolex had already shown efficacy in phase 3 trials as a treatment for seizures associated with Dravet syndrome. But today, GW Pharmaceuticals announced that the drug has shown encouraging phase 3 results as a therapy for seizures associated with Lennox-Gastaut syndrome (LGS).

In short, patients taking a normal-sized dose of Epediolex had between 37% and 42% fewer LGS seizures, versus only a 17% reduction in seizures for those merely using a placebo. That’s considered statistically significant.

GWPH CEO Justin Gover commented:

“We are very pleased to report this second positive Phase 3 trial in seizures associated with Lennox-Gastaut Syndrome. This is the third positive Phase 3 trial for Epidiolex reported in 2016. All three trials provide GW with robust evidence to support the efficacy and safety of Epidiolex. This latest trial also shows that Epidiolex likely has an effective dose range, allowing for dose flexibility to address individual patient needs. These compelling results make us more determined than ever to make this important new medicine available to patients who suffer from these treatment-resistant childhood-onset epilepsies.”

The company aims to submit an NDA with the Food and Drug Administration for this indication sometime in the first half of 2017.

Bottom Line for GWPH Stock

While GW Pharmaceuticals has a relatively clear path to multiple approvals of Epidiolex, Sativex and other drugs in its pipeline, it’s not just a few impending approvals that make GWPH such an interesting trade. What makes GWPH compelling is how it’s arguably the first name to meaningfully legitimize the idea that medical marijuana has a place in the world of pharmaceuticals.

Between that and the fact that it has several trials underway — at least a few of which should pan out — GWPH has earned a spot at the top of any watchlist of medical marijuana stocks.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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