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GW Pharmaceuticals (GWPH) shares jumped more than 20% after it reported that it was working with Morgan Stanley after other drug makers approached it to express interest in an acquisition, according to people familiar with the matter.
GW is one of the leaders in the cannabis industry. The British biopharmaceutical company was founded in 1998 and trades on the Nasdaq exchange.
GW commercialized the world’s first plant-derived cannabinoid prescription drug, Sativex, which is approved for the treatment of spasticity due to multiple sclerosis in 27 countries outside the United States.
Positive FDA Results Changed Everything
In mid-March, GW changed the way many people view the cannabis plant after it reported positive results in its pivotal Phase 3 Clinical trial evaluating the safety and effectiveness of Epidiolex in the treatment of patients with Dravet’s syndrome.
After GW reported the positive results, its shares soared from the high $30s to the low $90s. GWPH has fallen more than 14% from its highs following the results and we think this weakness has created an opportunity for investors, as the company’s first and second Phase 3 LGS trials were fully enrolled and GW expects to release top-line data in the second quarter of 2016.
Outlook
We continue to view GWPH as one of the top investments in the cannabis sector and see value at current levels. GW is trading well below its average Wall Street price target and if the company is acquired, it will be done so at a significant premium to its current price.
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