Following a blazing hot January, marijuana stocks cooled a bit in February but still advanced for the month. Through the first two months of 2019, the Horizons Marijuana Life Sciences ETF, which holds around four dozen pot stocks at various weightings, is up 60%.
Wall Street and investors are counting on substantial sales growth in the cannabis industry this year as Canadian adult-use weed legalization ramps up, and new alternatives, such as edibles, infused beverages, and vapes, prepare to hit the market before the one-year anniversary of recreational weed’s legalization on Oct. 17.
Of course, as with any new industry that’s trying to find its footing, there are bound to be hiccups. Following a strong start to the year, here are three marijuana stocks I’d strongly suggest you avoid like plague in March…
GW Pharmaceuticals
During the latter part of February, cannabinoid-based drugmaker GW Pharmaceuticals(NASDAQ:GWPH) was virtually unstoppable. Shares soared after the company reported operating results for the quarter that ended on Dec. 31. Since it launched the first-ever cannabis-derived drug to win approval from the Food and Drug Administration (FDA) at the beginning of November — Epidiolex, a treatment for two rare types of childhood-onset epilepsy — investors particularly coveted results from this quarter.
For the quarter, GW Pharmaceuticals recorded $4.7 million in net sales for Epidiolex, logged nearly 4,500 enrolled patients, and had more than 500 physicians doling out prescription since Nov. 1. The company also notes that filled prescriptions in January were about 150% higher than they were in December, and that a high percentage of the American public would be covered by insurance should they need Epidiolex, which has a list price of more than $32,000.
So what’s not to like? How about only $4.7 million in sales over a two-month period for a therapy that has zero FDA-approved competition in Dravet syndrome, and a handful of considerably older approved therapies to compete with in Lennox-Gastaut syndrome? In just over a week, $1 billion has been added to GW Pharmaceuticals’ market cap for a measly $4.7 million in sales. That makes no sense, especially considering GW Pharmaceuticals is still years away from turning a profit.
Making matters worse, Zogenix‘s (NASDAQ:ZGNX) lead drug, Fintepla (previously ZX008), ran circles around the placebo in late-stage Dravet syndrome studies. To be crystal clear, Epidiolex and Fintepla have…
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