As the bear market for the cannabis sector drags on, many investors are wondering when we will see some relief and which companies are going to be the first ones to emerge from the pack. GW Pharmaceuticals remains a very interesting company in our eyes because of its global diversity, although being heavily tied to the CBD market in America. We feel that GW Pharma is grouped with many of the largest cannabis companies in the world, in the current market conditions we actually favor GW Pharma’s revenue streams over some of the conventional cannabis companies. We feel that the pullback in GW Pharma was more so due to negative sentiment within the entire sector as opposed to negativity towards GW Pharma directly and this could have caused a fantastic buying opportunity. There has been some very exciting news that could benefit this company for years to come and we are going to try and figure out why.
GW Pharmaceuticals announced on Tuesday that the European Commission (EC) has approved its anti-epileptic drug Epidyolex as a treatment for seizures associated with Lennox-Gastaut syndrome (LGS) or Dravet syndrome in conjunction with clobazam for patients aged two years or older. This approval makes Epidiolex the first plant-derived cannabidiol medicine to be approved by the European Medicines Agency (EMA). Epidiolex is also the first and the only EMA-approved cannabidiol (CBD) medicine approved to treat LGS and Dravet syndrome, two severe and life-threatening forms of childhood-onset epilepsy. This follows Epidyolex’s approval in America in June 2018 which was also the first cannabis-derived drug used to treat LGS and Dravet syndrome in patients aged two years or older.
Our stance on pharmaceutical companies is relatively cautious for the most part, especially if the company is conducting clinical trials and does not have a product on the market yet. For GW Pharmaceuticals it’s a totally different story. The company can now dominate the US and European markets with its flagship product Epidyolex. In our opinion we are looking for companies that have diversified their revenue streams outside of North America and GW Pharmaceuticals has done just that. We like GW Pharmaceuticals for two reasons.
The company has its flagship product Epidiolex already on the shelf in America and has generated over 100 million in revenue for 2019 alone. With their European launch of Epidiolex, the company should continue to grow revenues in the future.
Their revenue streams are fairly stable with little to no competition. They have spent large amounts of capital developing and patenting Epidiolex which creates a larger barrier of entry into the market. The company has developed a unique product that offers a much healthier alternative than many prescription drugs that carry negative side effects.
These are two of the most important reasons why we feel that GW Pharmaceuticals is a great stock to watch right now. As we mentioned earlier, companies like GW Pharma who have been affected by the overall bearishness of the sector but have seen no material change to their business are highly in our favor right now. Let’s see what kind of revenue GW Pharmaceuticals can generate in Europe.
GWPH shares were unchanged in after-hours trading Friday. Year-to-date, GWPH has gained 19.53%, versus a 20.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaron Missere
Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More...
