Where Will GW Pharmaceuticals Be in 5 Years?

GW Pharmaceuticals (NASDAQ:GWPH) paved the way for modulating the cannabinoid pathway and turning that field of science into valuable prescription therapeutics. Over the past five years, GW transitioned from a promising idea to a commercial reality with two approved drugs in the U.S. and Europe…

Epidiolex, GW’s first drug to attain U.S. Food and Drug Administration (FDA) approval, launched into the market in November 2018 as a treatment for two rare forms of childhood-onset epilepsy. It also marked the FDA’s first approval of a cannabis-derived drug.

Epidiolex demand drives sales

GW touted Epidiolex’s successful launch in a September 2019 presentation, highlighting that more than 2,500 physicians wrote Epidiolex prescriptions for over 12,000 patients. Revenues exceeded $188 million in the first nine months of 2019.

European regulators approved the drug last September under the name Epidyolex. The initial launch in Germany and France began shortly thereafter. In December, the U.K.’s National Institute for Health Care and Excellence granted a favorable recommendation for routine reimbursement of Epidyolex and GW’s Sativex, a drug for the treatment of spasticity due to multiple sclerosis. This paves the way for the U.K. launch. GW plans to expand into Italy and Spain this year.

GW sees a need for therapy for roughly one-third of epilepsy patients with seizures who do not respond to existing anti-epileptic drugs. Several distinct and rare syndromes fall into that basket. Epidiolex’s initial approval treats patients aged two and older who experience seizures associated with Lennox-Gastaut syndrome and Dravet syndrome.

The commercial prospects of Epidiolex remain a near-term priority. While watching that, investors will keep a keen eye on the uptake across Europe following the September approval. Additionally, Sativex, which is sold in 25 countries by GW’s marketing partners, will enter pivotal trials for approval in the U.S.

Will GW remain independent?

It’s always tough to tell. Here is why it is challenging for a big pharma company to buy GW. Marijuana and cannabis remain illegal in the U.S. at the federal level. Until that changes, pharma companies don’t want to be perceived as possibly being on the wrong side of the law. The PR battle may be a greater stumbling block than the science or products.

Let’s look to history for an example. Thalidomide was a drug initially marketed for morning sickness, anxiety, and sleeping problems. What followed was an outbreak of birth defects and early deaths of babies whose mothers took thalidomide. Later the drug was shown to be effective in treating multiple myeloma, graft-versus-host disease, and skin diseases, including leprosy.

A little biotech company called Celgene acquired the drug and gained approval for use in cancer, where it went on to be very successful. In the early 2000s, Celgene, with a market cap under $100 million, tried to sell itself unsuccessfully. No big pharma would take on the PR nightmare that would come from acquiring a drug that caused thousands of birth defects. Faced with that reality, Celgene used thalidomide as its foundation and ultimately grew until Bristol-Myers Squibb acquired the company last year for $74 billion.

As with Celgene in the early days, I…

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