About a month ago, the U.S. Drug Enforcement Administration made the pro-medical marijuana industry decision to classify a GW Pharmaceuticals PLC (NASDAQ:GWPH) cannabidiol-based drug Epidiolex to its least restrictive category, and as of Thursday it became available for physician prescription to treat epilepsy in the U.S. Epidiolex can now be prescribed by physicians to treat patients on a less restrictive basis and supports the systemic acceptance of cannabis and cannabis-derived compounds as legitimate medical treatments.
“We are delighted to announce that Epidiolex is now available by physician prescription as a new treatment option for patients with LGS and Dravet syndrome, two of the most difficult-to-treat forms of childhood-onset epilepsy,” said Justin Gover, Chief Executive Officer of GW Pharmaceuticals in a statement. “Because these patients have historically not responded well to available seizure medications, there has been a dire need for new therapies that aim to reduce the frequency and impact of seizures.”
Epidiolex uses cannabidiol, or CBD, which is a non-psychoactive cannabis derivative. It is unlike THC-dominant strains which induce euphoria. CBD can be used as a treatment for inflammation, pain, anxiety, psychosis, seizures, spasms, and many other conditions. In the case of Epidiolex, the medicine has been chemically modified to target the treatment of epileptic seizures that come on as a result of two rare forms of childhood epilepsy, Dravet and Lennox-Gastaut syndromes.
The markets react
Traders reacted positively to the drug release and put GW Pharmaceuticals amongst the top marijuana stock gainers on Thursday. The stock price jumped $9.76 to $147.25 at market close or a 7.10 percent increase.
Like other marijuana stocks, GW Pharmaceuticals has been getting crushed for the past month or so in the markets, but the Epidiolex drug release is helping the stock make a comeback. GW Pharmaceuticals has also outperformed the overall industry, as measured by Horizons Marijuana Life Sciences ETF (TSX:HMMJ), in the last month. While GW is still down over 10 percent this month, the North American marijuana index is down over 20 percent during the same period.
GW Pharmaceuticals is a British-based, biopharmaceutical company traded on the NASDAQ exchange. They currently have a $4.779 billion market cap. While their primary focus is on treating central nervous system disorders, including epilepsy, the company is looking to continue commercializing marijuana-based products for medical treatment.
Maximizing marijuana stock market gains
While the legality of CBD-based products is constantly misunderstood, CBD is gaining federal acceptance more quickly than marijuana as a whole because the psychoactive nature of marijuana is removed from the equation. It is creating huge opportunities within the medical marijuana industry.
GW Pharmaceuticals is not the only company taking advantage of the health benefits of CBD. Other larger CBD-focused companies to watch include OrganiGram Holdings, Inc. (OTC:OGRMF), MedMen Enterprises, Inc. (OTC:MMNFF), and Aurora Cannabis (ACBFF). With the exception of Aurora, all of these stocks have outperformed the overall marijuana industry in returns over the past month. MedMen is strongly in the lead with 33.52 percent returns, mainly pushed by the company’s announcement of its planned PharmaCann acquisition.
Other pharmaceutical companies are taking advantage of CBD’s medical benefits and are testing and manufacturing CBD-based drugs. Cara Therapeutics Inc. (NASDAQ:CARA) focuses on using CBD for various medical treatments. Zogenix (NASDAQ:ZGNX) is a competitor of GW Pharmaceuticals with CBD-based epilepsy medicines, but they are waiting on FDA approval of their own similar drugs intended to treat Dravet syndrome. These two companies have also outperformed the overall marijuana market in the past month.
While there are many growing marijuana pharmaceutical companies, GW Pharmaceuticals has been the only company in the U.S. to be able to sell marijuana-derived medicine legally on the federal level. Before the groundbreaking DEA ruling, most marijuana-derived products were classified at the most restrictive Schedule I classification because marijuana is not legal in the U.S. on a federal level. This gives GW Pharmaceuticals a leg up over other pharmaceutical companies that haven’t received such legal support by the U.S. government, and traders have a very positive outlook about GW’s potential.