GW Pharmaceuticals (NASDAQ:GWPH) hit paydirt when its crown jewel — Epidiolex — became the first cannabidiol-derived drug approved by the U.S. Food and Drug Administration (FDA). Epidiolex is a treatment for seizures in patients with Lennox-Gastaut syndrome (LGS) and Dravet syndrome, both of which are rare forms of epilepsy. After its initial launch in late 2018, Epidiolex started racking up strong and growing sales. However, the drug’s sales growth has been decelerating every quarter, which is reflected in GW Pharmaceuticals’ revenue growth.
GW Pharmaceuticals’ shares are…
down by about 13% since the launch of Epidiolex in November 2018, whereas the S&P 500 index is up by about 22% over the same period. And with the company’s decelerating revenue growth, it is worth wondering whether GW Pharmaceuticals is worth investing in today.
| Quarter | Sequential revenue growth |
|---|---|
| Q1 2019 | 485% |
| Q2 2019 | 83.7% |
| Q3 2019 | 26.4% |
| Q4 2019 | 18.7% |
DATA SOURCE: GW PHARMACEUTICALS INVESTOR PRESENTATION — JANUARY 2020.
Epidiolex’s European launch
So far, sales of Epidiolex have only been in the U.S. However, in September 2019, GW Pharmaceuticals received approval from the European Medicines Agency (EMA) for Epidiolex (where it goes by the name of Epydiolex). The drug became the first and only approved treatment for seizures associated with LGS or Dravet syndrome in Europe. GW Pharmaceuticals is currently in the process of launching Epidiolex across five major European markets, including France and Germany. Once Epidiolex is launched across Europe, sales of the drug should pick up once again.
GW Pharmaceuticals’ pipeline
The launch of Epidiolex in Europe should provide a nice boost to GW Pharmaceuticals’ top line, but there’s even more to look forward to. Epidiolex is currently being evaluated for seizures associated with tuberous sclerosis complex (TSC), a rare tumor that affects the central nervous system. TSC affects between 40,000 and 80,000 patients in the U.S. alone and around 2 million worldwide. Further, epilepsy affects more than 90% of those with TSC, and for the majority of them, seizures aren’t successfully dealt with using standard treatment options.
In other words, there’s a need for a treatment for seizures associated with TSC, and Epidiolex looks like a promising option. GW Pharmaceuticals recently presented the results of a phase 3 study of Epidiolex as a treatment for seizure for patients with TSC. The study found that those treated with Epidiolex, as compared to a placebo, experienced a “significantly greater reduction in TSC-associated seizures.” GW Pharmaceuticals submitted a supplemental New Drug Application (NDA) to the FDA for Epidiolex as a treatment for TSC-associated seizures, and a decision is expected later this year.
If all goes well, GW Pharmaceuticals could launch Epidiolex for this new indication by year-end. Epidiolex is also being evaluated for seizures associated with Rett syndrome, an extremely rare condition that affects brain development, primarily in females. GW Pharmaceuticals has products other than Epidiolex in its pipeline; the main one is Sativex, which is currently being evaluated for muscle pain and spasm caused by multiple sclerosis (MS). Sativex — which is already approved in more than 25 countries outside the U.S — is currently in phase 3 testing. If Sativex is approved…
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