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Marijuana stocks surge as CBD drugs hit the market

Aug 24, 2018

On June 25, GW Pharmaceuticals (NASDAQ:GWPH), and their U.S. subsidiary Greenwich Biosciences released a statement, announcing themselves as the first biopharmaceutical company with an FDA-approved drug derived from natural cannabis. Epidiolex, a highly purified proprietary CBD-based oral solution for the treatment of two rare forms of epileptic seizures, Lennox-Gastaut Syndrome (LGS) and Dravet syndrome altered the cannabis landscape in many ways.  

[Read More: Cannabis Companies Cash In On The Soothing Effects of CBD Oil]

“In my practice, I often see patients with these highly treatment-resistant epilepsies who have tried and failed existing therapies and are asking about CBD,” said Orrin Devinsky, M.D., of NYU Langone Health’s Comprehensive Epilepsy Center and a lead investigator in the Epidiolex clinical program in a statement. “I am delighted that my physician colleagues and I will now have the option of a prescription cannabidiol that has undergone the rigor of controlled trials and been approved by the FDA to treat both children and adults.”

A significant milestone in the cannabis industry

Epidiolex is a crucial new development and marks a significant milestone in the cannabis industry. The FDA approved the product for patients two years of age and older, and in the next four years, it is expected to earn GW Pharma $625 million in revenue in both the U.S. and in Europe, at least according to data projections from New Frontier Data.

GW expects the product to be available soon. The FDA has 90 days from June 25 to reschedule the drug with the Drug Enforcement Agency, which experts anticipate will occur in September. Industry insiders expect the drug to be reclassified under Schedule IV or V. GW Pharmaceuticals is waiting on similar approvals in Europe from the European Medicines Agency as early as 2019.

[Read More: CBD Oil Market To Exceed $2 Billion As Medical Marijuana Alternative]

Even with partial year sales in 2018, revenues should be as much as $30 million, despite the high yearly cost of $32,500 on average. However, Epidiolex will be covered by insurance companies, so that will reduce out-of-pocket expenses. While a $30,000-plus cost may be mind-numbing, most epilepsy patients already pay close to this amount for multiple medications to control their symptoms. Fycompa is one example; the drug can cost as much as $1,500 per month.

Experts agree that Epidiolex is sure to be a huge success for GW Pharmaceuticals. The FDA-approved drug should have numerous off-label uses, and GW is already underway developing other CBD-based medications. The company already has a $3.87 billion market cap, and shares have increased over 700 percent in the last five years. Analysts are predicting a very strong launch for Epidiolex in 2018 in the U.S. and 2019 in Europe.

Courtesy New Frontier Data

Competition heats up in the CBD market

Another company exploring epilepsy research is Tilray (NASDAQ:TLRY), a medical cannabis company focused on research, cultivation, production, and distribution. Tilray operates in ten countries on five continents and is the maker of  Tilray 2:100, a high-CBD cannabis oil that shows promise for children with drug-resistant epilepsy caused by the rare Dravet Syndrome. Unfortunately, Dravet Syndrome is characterized by high morbidity as well as high mortality.

The drug’s 2:100 name comes from the ratio of 2mg/ml THC to 100 mg/ml of CBD. Both THC and CBD have anticonvulsant effects. The drug contains the highest CBD concentration in a medical cannabis product currently available through the Canadian medical cannabis program, Access to Cannabis for Medical Purposes Regulations.  Tilray just published the findings from its Canadian Phase II clinical trial, showing a reduction in seizures and EEG spikes, an increase in seizure-free days, and improvement of the overall standard quality of life measures.

The competition also heats up on the NASDAQ

In July, Tilray became the first Canadian Licensed Producer with an IPO on the NASDAQ stock exchange. Stock prices benefited from the Phase II clinical trials, the first study to examine the dosing and tolerability of a mixed cannabinoid CBD/THC product in children with epilepsy.

“We are excited by the encouraging results of this study and the ability to already offer this highly concentrated CBD product to patients in Canada. We developed this product based on a strong existing evidence base that a combination cannabinoid product may have numerous benefits in this difficult to treat patient population,” said Catherine Jacobson, Director of Tilray’s Clinical Research Program in a recent statement. “In the participants who reached the target treatment dose there was a statistically significant reduction in motor seizures, and an increase in seizure-free days compared to those who did not reach the target dose.”

The drug is already available to pediatric patients. As Tilray increases the supply, other patients will have access to the product. Tilray implemented introductory discount prices and also has a compassionate pricing program.

Tilray stock experienced another surge of nearly 10 percent earlier this week when the company became one of 26 official suppliers for the government-run Ontario Cannabis Store, the sole source for online recreational cannabis purchases opening October 17. About one month ago, Tilray had an IPO price of $17; the stock doubled in a few short weeks.

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