GW Pharmaceuticals (NYSE: GWPH) has a solid chance of getting its drugs past the NDA, but full approval is still up in the air. GWPH itself is a biopharmaceutical company based in the UK that specializes in research on cannabinoid products that treat diseases such as multiple sclerosis and epilepsy.
Their pipeline can be viewed here.
Sativex (generic name Nabiximols) is a currently approved spray used to treat symptoms of multiple sclerosis. GWPH markets Sativex primarily in the UK and the drug’s base is cannabinoids and THC. GWPH acquired a partnership with Bayer for exclusive marketing rights in the UK and another partnership with Novartis to market in Asia, Africa, and the Middle East.
Epidiolex is the cannabidiol (CBD) currently under pre-NDA submission for the following indications:
- Dravet Syndrome – Dravet Syndrome is a rare and severe infantile epileptic syndrome that is highly treatment resistant. It often reveals itself in previously healthy infants within the first year of life and raises the risk of sudden, unexpected death by epilepsy. Additionally, patients with Dravet Syndrome often develop intellectual and developmental disabilities later in life.
- Lennox-Gastaut Syndrome – Lennox-Gastaut Syndrome occurs in pediatric patients suffering from injuries or infections to the brain. Patients experience multiple seizures that are treatment resistant which often result in the patient having developmental delays and behavioral disturbances.
- Tuberous Sclerosis – Tuberous Sclerosis is a rare genetic disease (autosomal dominant) that causes benign tumors to grow in various organs. It can cause systemic symptoms such as seizures, skin disease, lung and kidney disease, etc.
- Infantile spasms – Infantile spasms is another severe syndrome that afflicts children with horrible seizures. These seizures can cause developmental delays, mental retardation, and possible death. In fact, 33% of infants afflicted die by age 3.
So far, the phase 3 studies have shown great promise:
- Dravet Syndrome Poster can be viewed here
- During the treatment period, CBD reduced convulsive seizures by 39% compared to the 13% in placebo (p = 0.0123)
- During the maintenance period, CBD reduced convulsive seizures by 41% compared to 16% in placebo (p = 0.0052)
- LGS Poster is available here
- During the treatment period, CBD reduced drop seizures by 44% compared to the 22% in placebo (p = 0.0135)
- During the maintenance period, CBD reduced convulsive seizures by 49% compared to 20% in placebo (p = 0.0096)
I will be the first to admit that I do not know much about cannabinoids, but what I do know is that the difference between cannabinoids and THC -the active ingredient in marijuana- is vast. Cannabinoids do not get the patient high nor cause the anxiousness/paranoia that comes with smoking marijuana. However, it lacks the relaxing sleepiness that marijuana induces.
Per last earnings (Q1 2017), they had $384m (USD) in cash with a burn rate of roughly $31m (USD) per quarter. This means the possibilities of dilution or other financial worries are relatively negligible.
The issue that I see here is the legality behind the drugs. There are a lot of political and social stigmas towards cannabinoid usage; parents who have treated their children’s seizures with cannabinoid oil have been heavily persecuted. So there is still a particular risk involved even despite the actions of many lobbyists working to change political thought on the subject. Cannabinoids are still classified as a Schedule I drug by the DEA, so the future of this drug is uncertain.
The science or the finances here isn’t the issue. The real issue is the legality and the political stigmata surrounding cannabinoids. While approval is up in the air, I do see this passing the NDA.
I do not have any position in this company. I may take a long position below $100 if it ever gets there, as I see support at around $95.
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