GW Pharmaceuticals PLC Attains Record High on Substantial Q1 Revenue Beat; Positive Phase III Results

Benjamin A. Smith
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Shares in GW Pharmaceuticals PLC (NASDAQ:GWPH) soared 8.82% off the open today, following dual post-market press releases yesterday afternoon. The high print of $196/share annihilated GWPH’s previous high water mark of $182.23 set in early March, standing as bullish testament of the news flow involved. Midas Letter explores further.

The first dissemination was in relation to GW Pharmaceuticals Q1 2019 earnings report. The results weren’t just good from an expectations standpoint—they were outstanding.

According to a research report disseminated by Paradigm Capital, the cannabanoid prescription medicines developer reported sales of US$39.2M—blowing the doors off consensus estimates of US$13.2M. This represents a nearly 200% upside surprise to consensus estimates, to which there are several (eleven analysts predicted $16.6M in revenue, according to Yahoo! Finance).

Most importantly, Epidiolex sales in the U.S. accounted for US$33.5M—eclipsing sales of Sativex—which is not approved domestically. While Epidiolex and Sativex medicinal properties/target market are not completely symmetrical (the former is cannabidiol-based while the latter is a CBD/THC blend), it nonetheless underscores Epidiolex’s “winning-over” of the U.S. market, where over 1,900 physicians have generated dispensed prescriptions since launch.

This was GWPH’s first full quarter of Epidiolex sales in the U.S., primarily among patients with two rare forms of childhood epilepsy: Lennox-Gastaut Syndrome and Dravet Syndrome. The positive inaugural reporting cycle should give investors confidence that GWPH Q2 2019 numbers—currently $27.54M in revenues from 11 analyst forecasts—can easily be obtained. Naturally, it’s quite possible GWPH could receive upward revenue revisions from sell-side analysts in the coming weeks.

On the clinical trials front, GW Pharmaceuticals scored a win there as well. The company announced positive outcomes data from its Phase 3 clinical trial that evaluated Epidiolex’s capacity to reduce seizure frequency associated with Tuberous Sclerosis Complex (TSC)—another rare form of severe childhood epilepsy.

Results for both the 25 and 50 mg/kg/day dose groups were similar, with seizure reductions of 48.6% and 47.5% from baseline respectively, vs 26.5% for placebo (50 mg/kg/day). All key secondary endpoints were supportive of the effects on the primary endpoint. The safety profile was consistent with findings from previous studies, with no new safety risks uncovered.

While patients did experience adverse events, Paradigm Capital believes these results are strong enough for GW to proceed toward submitting its Supplemental New Drug Application (sNDA) to the FDA—likely in Q4.

As of this publishing, shares in GWPH remain in record territory, although down significantly from the open’s high print. Any close above $182.23/share vaults the company into vaunted “blue sky breakout” territory; uncharted waters from a technical perspective. Although generally conducive from a price action perspective, there are never any guarantees profit takers won’t indulge at the buffet table.

We again note again that GW Pharmaceuticals big revenue beat opens the possibility for analysts to revise price targets upwards, with Q2 2019 estimates are substantially below Q1 2019 actual revenues. This would generally be considered a tailwind on prices.

Benjamin A. Smith

Benjamin A. Smith

Ben is a research analyst and capital markets professional with nearly 20 years of experience. His areas of expertise are broad-based, and include extensive knowledge of macro economics, stock/derivative trading, commodity complexes, cryptocurrencies and technical/quant analysis. He also maintains an particular affinity for U.S. politics and the macro-regulatory environment facing...
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