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GW Pharmaceuticals PLC- ADR (GWPH) Stock Is Just Getting Started

With revenue down 62% on a year-over-year basis and a loss of $21.8 million booked for the quarter in question, one might have expected GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH) to be deep in the red on Monday. That’s not the case at all, however. GWPH stock was up a healthy 5.5% on the first day of the new trading week, on the heels of major success on the research and development front … one of its flagship therapies aimed at difficult-to-treat forms of epilepsy showed great efficacy in late-stage trials.

GW Pharmaceuticals PLC- ADR (GWPH) Stock Is Just Getting Started

The endzone for the drug’s approval is in sight, where it could join a different drug GW Pharmaceuticals has already commercialized.

Most impressive of all, however, is that both drugs are built on cannabis — marijuana — bolstering the legitimacy of the plant as the foundation for a variety of pharmaceuticals.

What’s GW Pharmaceuticals?

There are counteless marijuana stocks out there, with dozens of them claiming to be an investment in a pharmaceutical breakthrough. Most of them are little more than a wish and a prayer, however. Not GWPH stock though. GW Pharmaceuticals is one of arguably only two names in the budding space that serious investors can afford to take seriously; the other outfit is Incyte Corporation (NASDAQ:INCY).

Indeed, GW Pharmaceuticals has already won the approval for a cannabinoid-based drug called Sativex.

Sativex is the world’s first approved/prescription-based cannabis drug. The United Kingdom was the first to give it the green light back in 2010 as a treatment for certain symptoms of multiple sclerosis … pain and spasticity, mostly. Since 2010, it has won approval in 29 more countries, primarily for the same conditions.

Not one of those countries are the United States, where marijuana is still technically illegal at the federal level yet legal in some states, and where cannabis itself — a marijuana extract — falls into a gray area in terms of legality (it’s by definition illegal, but clearly shouldn’t be).

Sativex wasn’t the hot button on Monday though. That honor belongs to Epidiolex, which performed well in the company’s phase 3 testing as a treatment for two different rare, treatment-resistant forms of childhood-onset epilepsy.

Epidiolex Nails It

During the quarter, Epidiolex showed positive results as a treatment for Dravet syndrome and as a therapy for Lennox-Gastaut Syndrome. Specifically, Epidiolex achieved its efficacy goal for both phase 3 trials, performing better than the placebo/control as measured by a reduced numbers of seizures.

The drug was also well tolerated by the study’s participants.

GW Pharmaceuticals’s Chief Executive Officer Justin Gover commented:

“We are pleased to present key findings from two pivotal Phase 3 studies of Epidiolex and believe these additional positive data reinforce the robust nature of the results achieved in two of the most difficult-to-treat epilepsy patient populations … We are making very good progress toward a NDA submission to the FDA as well as preparations for commercial launch and look forward to the opportunity to make this important new medicine available to patients as quickly as possible.”

And he wasn’t kidding about moving quickly. Based on the company’s meetings and work so far, it intends to submit a new drug application with the United States’ Food and Drug Administration during the first half of 2017, and will officially request approval from E.U. regulators during the second half of the coming year.

An approval of Epidiolex would be a victory for GWPH stock, but not necessarily a done deal even if the FDA gives the company the nod. The nation’s Drug Enforcement Agency would still need to categorize the drug as a schedule 3 or schedule 4 narcotic to be truly “legal.”

That’s easier said than done, though it is doable.

Looking Ahead for GWPH Stock

Just looking at the numbers for the recently completed fourth quarter, it would be easy to assume even if Epidiolex was approved and then legalized, it wouldn’t matter. If Sativex sales plunged 62% last quarter, how could a relatively similar Epidiolex fare any better?

The other key detail: The bulk of last quarter’s revenue decline wasn’t reflective of declining pharmaceutical sales. GW Pharmaceuticals booked a major drug-development bonus in the same quarter a year earlier. Product sales (and Sativex is the company’s only product right now) were up $1.2 million to $6.6 million for the fourth quarter. That’s promising progress, and bodes well for GW Pharmaceuticals with or without approval and full-legalization in the United States.

GWPH stock continues to be one of the few truly investment-worthy marijuana stocks available to non-speculators.

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

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