Headquartered
in Salsbury, United Kingdom, GW Pharmaceuticals (NASDAQ:GWPH) uses its
proprietary cannabinoid product platform to create and develop new therapeutics
that can be used for a variety of treatments. The company's therapeutics, along
with current and proposed treatments, include:
· Sativex® for treating chronic cancer
pain and multiple sclerosis spasticity
· Epidiolix® for the treatment of
childhood epilepsy, Dravet syndrome, and Lennox-Gastaut syndrome
· Cannabidivarion for treating epilepsy
· GWP42003 for treating ulcerative colitis
and schizophrenia
· GWP42004 for treating type-2 diabetes
· GWP42002: GWP42003 for treating glioma,
a tumor that starts in the brain or spine
One important
development is that Sativex® was given Fast Track designation by the FDA for
the treatment of chronic cancer pain in patients with advanced cancer who are
not responding to opioid therapy. It is currently in a Phase 3 program for
cancer pain with the FDA. Sativex® is already approved in 26 countries for
spasticity caused by multiple sclerosis.
Strong Cash Position and Growing Revenues
In an industry
where most companies don't even report revenues, GW has been generating
revenues for years. For the latest reported quarter, revenues were up by 4.9%.
Although the company has been generating losses, it has a huge cash cushion
from its secondary offering in June of this year, netting the company $118
million, an increase of 342% in cash position over fiscal year end last year.
GW in GBP 000's
|
6/30/2014
|
6/30/2013*
|
%
Change
|
Revenue
|
7,611
|
7,258
|
4.9%
|
Cash
|
168,268
|
38,069
|
342.0%
|
Total
Equity
|
157,774
|
35,402
|
345.7%
|
Balance sheet
data as of 9/30/2013, fiscal year end
Revenue Growth
Revenue growth
was primarily due to an increase in Sativex product sales generated by a rise
in shipments to the company's commercial partners. In addition, total net
revenues were helped by an increase in income from license, collaboration, and
technical access fees.
Net loss went
from GBP 2.028 million to GBP 6.928 million, due to a higher cost of sales from
the higher volume of inventory shipped, an increase in research and development
expenditures, and a rise in administrative expenditures caused by increased
staffing expenditures and an unrealized loss on foreign exchange.
Inventories
have remained constant over last year, at roughly GBP 4.7 million. In regards
to guidance, the company expects strong double digit revenue growth for 2014.
Business Developments
Epidiolex®
FDA Authorized
Physician-Led Access Program with about 100 children now receiving treatment in
the United States at six hospital locations.
Orphan Drug
Designation, Fast Track Designation were granted. An Investigational New Drug
Application has been opened with
the FDA for the treatment of Dravet Syndrome. An additional Phase 3 trial is on
track to begin in 2015.
Orphan Drug
Designation was granted by the FDA for treating Lennox-Gastaut Syndrome. Phase
3 trials are on track to begin in 2015.
The company is
collaborating with New York State and Georgia for Epidiolex clinical trials for
epilepsy.
Sativex®
Phase 3 cancer
pain data is expected to be released at the end of 2014, which would lead to an
FDA New Drug Application.
Cannabidivarin
A Phase 2 trial
for epilepsy should begin at the end of 2014 or the beginning of 2015.
Competitiion
Competition for
this company could be looked at several ways. It could be examined as a biotech
company, such as Biogen (NASDAQ:BIIB) and Questcor (NASDAQ:QCOR).
Or it could be
looked at as a medical marijuana company, of which there are dozens. However,
most of the other companies in this field are microcap stocks and penny stocks.
The nearest competitors, based on large market cap, are Solvay SA (OTC:SVYZY),
at a $13 billion market cap, which produces Marinol, a form of the primary
marijuana ingredient tetrahydrocannabinol, commonly known as THC, and Valeant
Pharmaceuticals Intl. (NYSE:VRX),
at a $42 billion market cap, which
distributes nabilone/Cesamet, a form of synthetic THC. Yet, in both of
these cases, the THC drug is only a small part of their business.
If you are looking for other competitors, you can find a
list of over 100 marijuana stocks at WallStreetNewsNetwork.com, along with
information on the Stockerblog.com Marijuana Stock Index.
Timeliness
In the recent
November election, Alaska, Oregon, and the District of Columbia have legalized
the recreational use of marijuana. However, what is more important, and not
many realize, is that 23 states have already legalized the use of medical
marijuana.
Summary
GW Pharmaceuticals is a worldwide leader in the development of plant derived cannabinoid therapeutics.
GW is one of the few medical marijuana stocks with a market cap of over a billion dollars.
The company has been in business for 15 years and has produced the first marijuana related prescription drug, Sativex.®
It recently raised $118 million in a secondary offering.
Revenues for the latest reported quarter were up 4.9%.
Conclusion
GW has had a
heck of a run this year, doubling in share price, so an investor obviously has
market risk, and considering the speculative nature of the stock, if the stock market
tanks, this stock could suffer much more than the average stock.
As is typical
for many biotech companies, GW is not generating earnings yet. On the plus
side, the company is increasing quarterly revenues on a year over year basis
and has several therapeutic products in the pipeline. In addition, it is flush
with cash.
So for
investors that are willing to take the risk, and want to participate in the
medical marijuana industry, you can't find a more solid pure play than GW
Pharmaceuticals.
Disclosure: Author did not have any positions in any of the above at the time the article was written and has no plans to do so in the next 72 hours.
By Stockerblog.com
