As states across the country are legalizing marijuana, the demand for the plant-based medicine is on the rise. In order to keep up with the demand, The US Food and Drug Administration (FDA) is working to approve a variety of cannabis-based medicines amid continued federal rulings limiting medical marijuana. This can mean big bucks for the pharmaceutical companies that are already researching and developing their own cannabinoid prescriptions.
There are three big pharmaceutical stocks in particular that have the most to gain from FDA approval. GW Pharmaceuticals, Zynerba Pharmaceuticals, and Sanofi have the most to offer investors when it comes to medical marijuana.
Here is a breakdown of what you need to know about the top three pharmaceutical stocks so you can make the smartest investment.
According to their website, GW Pharmaceuticals (NASDAQ: GWPH) has been researching the medicinal potential of cannabis since 1998. For twenty years, the company’s main focus has been neurological disorders, and they manufacture and test cannabinoid formulas to treat epilepsy, autism, schizophrenia, and multiple sclerosis. Epidiolex – a treatment for epilepsy, and Sativex, a new treatment for the spasticity symptoms of multiple sclerosis, are the two drugs up for FDA approval in 2018.
GW Pharmaceuticals filed New Drug Applications (NDAs) for both Epidiolex and Sativex just last year. PotNetwork recently disclosed that Epidiolex was granted Priority Review by the FDA, and the drug should be ready to go as early as June of this year. With approval for the drug imminent, Epidiolex is already giving GW’s stock a healthy boost. The market predictions consider another jump as soon as the drug is officially approved. And with 470,000 children suffering with epilepsy in the United States, GW has the potential to generate a whopping nine figures in annual sales.
Exclusivity is the reason investors need to keep their eye on GW Pharmaceuticals in 2018. When a drug is approved by the FDA, it is granted a minimum exclusivity of five years. This means that no other medicine with similar properties can hit the market until that exclusivity expires. Right now, Epidiolex is the only drug available to treat certain forms of epileptic seizures, and because the drug can be prescribed to children as well as adults, this could give Epidiolex an extra six-month pediatric exclusivity.
If GW Pharmaceuticals can keep this stronghold on the medical marijuana market, they will be a powerful force to reckon with.
Zynerba Pharmaceuticals (NASDAQ: ZYNE) is a unique stock to watch. This biotech company operates in a niche medical market that specializes in transdermal pharmaceuticals. Currently they are developing two drugs, a CBD gel to treat Fragile X Syndrome and a THC patch that can be worn directly on the skin to treat Tourette’s. The company is concurrently investigating the additional indications of these therapies as their research rolls into Phase 2.
According to their website, the CBD gel, which is presently called ZYN002 during testing, has been granted orphan drug status by the FDA. Zynerba are scheduled to meet with the FDA for approval in the United States during the first quarter of 2018.
Orphan drug status means that the ZYN002 gel treats a disease affecting less than 200,000 people in the country. This status will grant the drug a seven-year exclusivity if it’s approved, which makes Zynerba’s medicinal marijuana development just as lucrative as GW Pharmaceuticals’. This promising research made it possible for Zynerba to sell over three million shares last year, leaving them with over $75 million to fund their research through the remaining phases before filing their NDAs.
Investing in Zynerba’s pharmaceutical stock is a little riskier than GW Pharmaceuticals’ only because their research is not as far along. Investors are left in the dark until Phase 3 research studies can begin, and even then the illegal scheduling of marijuana in the United States could slow down the approval process.
Regardless, Zynerba is confident in their development timeline and in their potential for FDA approval. As long as the Phase 3 research of their ZYN002 CBD gel follows the same successful trials as Phases 1 and 2, investors can remain optimistic.
The French pharmaceutical firm Sanofi (NASDAQ: GCVRZ) is one of the companies playing the medical marijuana long-game. As a titan with an epic market cap of almost $124 billion, Sanofi is waiting around to scoop up the cannabis research and development companies once they hit that high. Their current research, involving a wide range of diseases and disorders, focuses on multiple sclerosis and other neurodegenerative diseases which can greatly benefit from cannabinoid-based medicines.
Investors need to keep an eye on this one. Their new drug Dupixent, used to treat eczema, may not have cannabis in it, but it is projected to earn $4.3 billion in sales by 2022. With this kind of money at their disposal, Sanofi is in position to fund research and purchase cannabis companies in the not-so-distant future.
The amount of money Sanofi has at their disposal is a big reason to pay attention to this pharmaceutical stock in 2018. They are buying up other pharmaceutical companies left and right, and their recent purchase of Bioverativ on Monday caused a lot of waves. Although there is a growing trend of bigger pharmaceutical companies buying up smaller biotech firms, Sanofi’s stock still dropped 4% that same Monday. And the recent claims of insider trading also puts a damper on Sanofi’s profits. The Securities and Exchange Commission (SEC) froze the transaction of over $11 billion until the trader’s names are released.
But where there’s smoke, there’s always a fire, and this drama is worth watching play out. The market for medicinal marijuana will continue to grow, and big pharma like Sanofi are going to do their best to keep up.
As for investors, the market is ripe for the picking. These top pharmaceutical stocks are worth watching. We are barely through the first month of 2018 and the market is already seeing huge strides in research, cultivation, and sales. Even with a few snags coming from the FDA and the SEC, it’s not going to slow down the demand for medicinal marijuana.
[photo credit: Pat Gulney]