Cannabis Biotech Stock to Provide Catalysts for Years to Come

This morning, Nasdaq-traded biotech firm GW Pharmaceuticals (GWPH) reported its fourth quarter earnings and the shares are trending higher in pre-market trading.

The company also announced additional positive Epidiolex Phase 3 data in poster presentations at the 70^th Annual Meeting of the American Epilepsy Society. The studies represented in the posters are the first randomized, double-blind, placebo-controlled studies to investigate the efficacy and safety of CBD added to concomitant antiepileptic drug therapy in Dravet syndrome and LGS. 

Although GW reported slightly less than robust Phase 3 Clinical data from its Epidiolex study in Dravet Syndrome when compared to Lennox Gastaut Syndrome, we remain confident that the trial, which met its primary endpoint, showed a strong trend on responder rate, and hit multiple other secondary endpoints that is likely to be supportive of approval in the United States and Europe.

Reports New Positive Data for Epidiolex

The data came from the company’s positive pivotal Phase 3 study of Epidiolex in Dravet syndrome and the first pivotal Phase 3 study of Epidiolex in Lennox-Gastaut syndrome (LGS). Highlights of both Phase 3 studies include:

• Each pivotal Phase 3 study achieved the primary endpoint demonstrating a statistically significant difference between Epidiolex and placebo in seizure frequency reduction during the 14-week treatment period.
• In the 12-week maintenance period, the treatment effect increased for patients receiving Epidiolex and showed a greater level of statistical significance compared with placebo.
• Caregivers of patients receiving Epidiolex were significantly more likely to report an improvement in overall condition.
• A consistent separation between Epidiolex and placebo across all response rates was seen. In the LGS study, the drop seizure responder analysis showed a statistically significant separation between Epidiolex and placebo at the 50% seizure reduction threshold.
• Epidiolex efficacy was established relatively early in treatment and it was generally well tolerated.

Deep Pipeline of Products to Create Catalysts for Years to Come

In its earnings report this morning, GW provided an update on its product portfolio. During 2016, GW advanced several clinical programs in its deep pipeline of cannabinoid product candidates. Highlights from the year include:

• CBDV Phase 2 partial-onset epilepsy study in adults is ongoing as Part A is complete and Part B is underway with data expected mid-2017
• CBDV pre-clinical research is ongoing within the field of autism spectrum disorders. Phase 2 trials expected to commence in the third quarter of 2017.
• The company received the Orphan Drug Designation from FDA for CBDV for the treatment of Rett syndrome
• In December, GW commenced Phase 1 trials for its Neonatal Hypoxic-Ischemic Encephalopathy (NHIE) intravenous CBD program
• The company received the Orphan Drug Designation from the FDA and EMA
• THC:CBD for the treatment of Recurrent Glioblastoma Multiforme (GBM). Phase 1b/2a study has been completed and data is in the first quarter of 2017. The company received the Orphan Drug Designation from FDA
• Sativex Phase 2 study in children with spasticity due to cerebral palsy has been completed and data is in

2016 Proves to be a Banner Year

CEO Justin Gover said, “In 2016 GW has completed three positive Phase 3 trials for Epidiolex in patients with two different rare treatment resistant forms of childhood-onset epilepsy and we are making good progress towards an NDA submission. Our sights are now focused on Epidiolex approval and accelerating our preparations for a highly successful launch. Our goal is to provide the children and their families suffering from these highly treatment-resistant forms of childhood-onset epilepsy with a much needed new prescription option as quickly as possible.”

Epidiolex orphan epilepsy program in Dravet syndrome, Lennox-Gastaut Syndrome (LGS), Tuberous Sclerosis Complex (TSC) and infantile spasms (IS) Phase 3 trials:

• Reported positive results in a pivotal Phase 3 Dravet syndrome trial
• Reported positive results in 2 pivotal Phase 3 LGS trials
• Phase 3 trial in TSC ongoing
• Two-part Phase 3 trial in IS commenced in December 2016

Continues to be a Top Pick

As of September 30^th, GW reported to have $483.4 million in cash and cash equivalents. This capital will help the company continue to expect on its deep product pipeline and bring its products to market.

We continue to view GW Pharmaceuticals as one of the top investment opportunities within the cannabis sector as it is the only Nasdaq traded company focused on developing treatments from the actual cannabis plant.

Unlike Zynerba Pharmaceuticals (ZYNE) and Insys Therapeutics (INSY), which develop its treatments from synthetic cannabis, GW uses the actual cannabis plant and the benefits of this are reflected in its continued success in FDA trials. In late September, GW reported its second positive Stage 3 Clinical trial for its Epidiolex product for the treatment of seizures associated with Lennox-Gastaut syndrome (LGS).

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Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Technical420.com. Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.

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