GW Pharmaceuticals: One of the Top Biotech Stocks for 2020
In the period of May to December 2019, shares of GW Pharmaceuticals had to suffer a major setback and lost more than 85% as a result of the disappointing performance of classical cannabis-producing companies such as Canopy Growth or Aurora Cannabis. After a good start in 2020 and a plus of 14% until mid of February, the stock price dropped again as a result of Coronavirus fears. Nevertheless, the long-term story of GW Pharmaceuticals is intact. Here are the 3 main reasons why we think that this stock is still a good choice for a long-term investment.
1) Strong Growth of Epidiolex in the Last Year
There was a clear reason for the outstanding performance of this stock beginning of the year. Epidiolex, the first biotechnologically produced and approved CBD-based drug, showed an impressive uptake since approval in the US in summer 2018. In the first quarter of 2019, GW Pharma reported sales of $33.5 million for Epidiolex. This number literally skyrocketed to more than $104 million for the fourth quarter of 2019, a 215% increase within less than one year.
You might now think that the exploding sales would translate to a strongly increasing share price. But this wasn’t the case for GW Pharmaceuticals. At least not so far.
2) Epidiolex Potential Is Far From Being Exhausted
For 2020, GW Pharmaceuticals plans to focus heavily on reaching more physicians and providing more US patients with access to its drug. The company tries to secure greater payer coverage in the US and plans to launch Epidiolex in several new countries such as the United Kingdom, Spain, Italy, and France.
In addition, the company anticipates to position Epidiolex as a treatment option for patients with tuberous sclerosis complex (TSC), a rare genetic disease that causes non-malignant tumors in the brain and in other vital organs such as the heart, liver, kidneys, lungs and eyes. If everything goes according to plan, the drug might be approved by the American and European healthcare authorities in 2021.
3) Promising Pipeline
GW Pharmaceuticals has a very solid research pipeline with several phase 3 trials in indications such as MS spasticity or Rett syndrome, a rare genetic neurological condition that causes a progressive loss of motor skills. It is therefore likely that the future growth will not only be driven by Epidiolex but also by the pipeline and new drugs. We still think that the medical and commercial potential of cannabinoid-based drugs is greatly underestimated by many experts and physicians worldwide.
It is exactly these 3 reasons in combination with the current setback of GW Pharma’s stock price which brought us to the conclusion that it is now an ideal opportunity for an investment in GW Pharmaceuticals, a highly promising member of our Biotech Investments Model Portfolio.
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