GW Pharmaceuticals Stock Price
In the world of pharmaceuticals, patents are one of the most critical aspects to a company’s stock forecast. Being able to pass clinical trials and obtain patents can make or break a company’s share value overnight.
GW Pharmaceuticals PLC – ADR (NASDAQ:GWPH) is heavily invested in a cannabis oil drug mean to treat epilepsy called “Epidiolex.” The GW Pharmaceuticals stock price received a solid boost following the receipt of five new epilepsy drug patent allowances for its cannabis-based drug.
Marijuana investors interested in GWPH stock should look beyond the short-term gains and take a long view. While the GW Pharmaceuticals stock price did enjoy a resurgence of sorts following the receipt of the five new epilepsy drug patents, there’s still a long way to go before I can comfortably foresee strong long-term gains.
Developments in the Cannabis Oil Industry
First, let’s start with the bad news.
The GWPH stock price is down nearly 16% since the beginning of the year and, like many other pharmaceutical companies interested in getting in on the marijuana game, 2018 has not been kind to its share value.
The good news, however, is that the cannabis oil sector is set to explode. GW Pharmaceuticals is betting on its cannabis-based drug Epidiolex to help rescue its stock from what has been a tough 2018.
As I mentioned in an earlier piece, cannabidiol (CBD) market analysis reported by Forbes projects a market increase of 700% by 2020. Another study on CBD market growth, by Hemp Business Journal, estimates that the sector will reach $2.1 billion by 2020, which would be an enormous rise from the $202.0 million in 2016. (Source: “Pot Stocks Gearing Up for Strong 2018 as Cannabis CBD Frenzy Intensifies,” Cision, December 12, 2017.)
The best medical marijuana stocks are going to searching for ways to take advantage of this rapid growth.
There’s obviously a lot of play around pot as a product in and of itself, but cannabis oil and its restorative qualities make it one of the more intriguing areas of the industry, in terms of future expansion.
That the GW Pharmaceuticals stock price is partially tied to this part of the industry is undoubtedly a good thing, as the cannabis oil sector will no doubt grow in the years to come.
The problems come in when you examine the pharmaceutical industry as a whole and, more specifically, the marijuana bio-tech subsector.
GWPH Stock Forecast
So what’s in store for the future of GWPH stock? I don’t see the patents as having a long-term effect on the overall outlook of the GW Pharmaceuticals stock price.
That doesn’t mean the company won’t receive a boost from the news. Far from it; this is definitely a good first step.
Chart courtesy of StockCharts.com
The problem is that pharmaceutical companies face a lengthy process of clinical trials and approvals in order to actually sell their drugs. It’s one of the biggest drawbacks of pharma in general, and it can make the sector especially volatile. One poor clinical trial for a flagship product and shares can sink like a ton of bricks.
Need proof? Take a look at the company’s recent struggles following the less-than-stellar results of a Phase 2a test of cannabidivarin (CBDV).
CBDV is a cannabis-based molecule that GW Pharmaceuticals is currently evaluating for treatment of people with focal seizures.
The CBDV test failure in Phase 2a showed little difference between the effects of the placebo given to the control group and the actual drug given to other participants in the experiment. (Source: “GW Pharmaceuticals Announces Preliminary Results of Phase 2a Study for its Pipeline Compound GWP42006,” GW Pharmaceuticals, February 21, 2018.)
The price of the poor showing in the trial was a steep decline in the GW Pharmaceuticals stock value, with roughly a 10% decline in a single day.
“Whilst the results of this adult focal seizure study for GWP42006 are disappointing, we remain committed to advancing this pipeline compound to address unmet needs in the field of autism spectrum disorders, in which a promising body of pre-clinical data has already been generated, as well as continuing to explore the product’s potential within the field of epilepsy,” said GW’s CEO Justin Gover. (Source: Ibid.)
But the damage was done and the GW Pharmaceuticals stock price took a dive.
“The company’s top priority in 2018 remains Epidiolex, for which we have generated compelling positive data in three Phase 3 trials, and which is currently under regulatory review in the U.S. and Europe,” continued Gover.
“We are very excited at the prospect of launching this potential breakthrough treatment later this year in the U.S., whilst continuing to progress our broad and innovative cannabinoid pipeline.”
Taking in the big picture, I don’t see GW Pharmaceuticals as having made significant enough headway to warrant too much excitement.
While there is definitely potential for the company to come away with strong gains this year—especially if Epidiolex is approved in a speedy fashion—I believe that GWPH stock remains a risky, volatile pick.
If you’re risk-prone and believe in the company, its play toward the cannabis oil sector is certainly intriguing. If, however, you value more security (and, frankly, higher potential gains), I believe there are far better picks in the marijuana sector.