By Ciara Linnane, MarketWatch
Shares of GW Pharmaceuticals PLC jumped 18% Tuesday, after the biotech posted a narrower-than-expected third-quarter loss and a revenue beat and said a delayed late-stage trial of its cannabinoid-based treatment for multiple sclerosis spasticity can now proceed.
Volume of 2.14 million shares traded was 5.5 times the 65-day average of 385,930.
GW Pharma /zigman2/quotes/209686240/composite GWPH -0.28% is the first company to win U.S. Food and Drug Administration approval for a cannabis-based drug, in the form of Epidiolex, a treatment that thus far has mostly been used to treat severe forms of childhood epilepsy.
Epidiolex sales came to $132.6 million in the third quarter, accounting for the vast majority of total sales of $137.1 million. That was up from $91.0 million in the same period a year ago, and ahead of the FactSet consensus for $127.4 million.
The company’s net loss narrowed to $12.2 million or 3 cents a share, from $13.8 million, or 4 cents a share, in the year-ago period. The FactSet per-share loss consensus was 5 cents
“We are pleased to report strong revenue growth in the 3rd quarter despite the challenges presented by COVID-19,” said Chief Executive Justin Gover. “Epidiolex meets a serious unmet need within the field of epilepsy and we expect the product to demonstrate continued strong growth in the months and years ahead.”
The company will now move ahead with a Phase 3 trial of nabiximols, as a therapy for MS spasticity, and is hoping to be able to file a new drug application as early next year, he said. “Beyond nabiximols, we are advancing several clinical-stage pipeline candidates, including the recent start of a Phase 2 trial in schizophrenia,” he said.
On the company’s earnings call, Gover said in two years since its U.S. launch, epidiolex has achieved penetration of about 30% of patients suffering from Lennox-Gastaut syndrome, or LGS; 40% of patients with Dravet Syndrome; 20% of patients with epilepsy due to Tuberous Sclerosis Complex, or TSC, and less than 10% of other refractory childhood epilepsies. The company’s sales force began actively promoting the treatment to TSC patients aged one year old and older in the second half of August, after it won approval for that indication in early August.
“While this level of penetration is significant, it is clear that there are tens of thousands of US patients that remain potential candidates for Epidiolex,” he said.
In recent weeks, GW Pharma has started the Phase 3 trial in the U.S. of multiple sclerosis patients, started a Phase 2 trial of schizophrenia patients and conducted the first in-human dosing in a Phase 1 trial of a new drug candidate targeting neuropsychiatric disorders.
Outside of the U.S., Epidiolex is approved in the U.K. and Germany, with sales totalling $11.0 million in the quarter. The company said it’s making progress with pricing and reimbursement talks in France, Italy and Spain. The therapy won approval in Australia in September and GW Pharma expects to launch there in the first half of 2021.
Evercore analysts said the company’s “solid” execution in the face of the pandemic “bodes rather well for the company in 2021 as we get to the recovery phase of COVID19.” Analysts led by Josh Schimmer reiterated their outperform rating on the stock and lowered their price target to $270 from $275, which they said is “still significant premium reflecting the significant opportunity for Epidiolex for seizures and nabiximols for spasticity.”
Raymond James analysts said they are sticking with their market perform rating on the stock.
“While we expect the TSC launch to drive Epidiolex revenue growth over the next few quarters we still remain concerned about the longer-term outlook for the drug,” they wrote in a note to clients.
GW Pharma shares have fallen 22% in the year to date, while the SPDR S&P Biotech ETF /zigman2/quotes/205950134/composite XBI +0.76% has gained 35%, and the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.48% has gained 4.4%.