UK Relaxes Rules On GWPH Cannabis Drug Epidyolex; Analysts Bullish On Stock’s Prospects

Cannabis stock GW Pharma (GWPH) has announced that the UK Home Office has lowered its classification of Epidyolex (cannabidiol). This change will take effect immediately in the UK – with Northern Ireland enacting separate legislation – and sees the medicine move from Schedule 2 to Schedule 5 under the Misuse of Drugs Regulations 2001.

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“The decision to move Epidyolex to a low level of control is an important one for patients, their families, healthcare professionals, pharmacists and the NHS as a whole – reducing costs and ensuring the medicine can be dispensed more easily,” said Chris Tovey, GW’s Chief Operating Officer.

“The extensive pre-clinical and clinical data that GW developed to support the medicine’s approval by regulatory authorities was pivotal to this important schedule change.”

He added that the company remains committed to expanding the evidence base for cannabis-based medicines and securing further regulatory approvals to support further rescheduling.

An oral solution which contains highly purified cannabidiol (CBD), Epidyolex received approval in Europe in 2019 for the adjunctive treatment of seizures associated with Lennox-Gastaut syndrome (LGS) or Dravet syndrome in patients two years of age or older in conjunction with clobazam.

In its recommendation to the Minister, the advisory council cited the “low risk of abuse potential, low risk of dependency and low risk of diversion.” Interestingly the council added that GW’s medicine is “distinct from other commercially available CBD containing supplements that have not sought marketing authorization as a medicine” and so the schedule change applies exclusively to Epidyolex.

GW’s medicine is now exempt from virtually all controlled drug requirements, says GWPH. This gives patients greater flexibility on the quantity of medicine and repeat prescriptions, whilst healthcare professionals and pharmacists will now see reduced controls around storage and reporting requirements.

Shares in GWPH are currently trading up 19% year-to-date, and analysts are unanimously bullish on the stock’s outlook. All six analysts covering the biotech rate the stock a buy. Meanwhile the average analyst price target of $168 indicates 34% upside potential lies ahead. (See GWPH stock analysis on TipRanks).

“Given the Epidyolex’s favorable efficacy/safety profile, the significant unmet need in these diseases, and positive physician feedback, we believe adoption could be both rapid and substantial” wrote JP Morgan Cory Kasimov on June 23.

He believes that near-term label expansion opportunities (Tuberous Sclerosis) and the potential for off-label use in the broader population of general epilepsy patients could contribute significantly to the top line.

Additionally, Kasimov notes that the company has a second, perhaps underappreciated potential revenue driver in the form of a second drug, Sativex, for the treatment of stiffness in patients suffering from multiple sclerosis.

“A respectable pipeline of additional assets across an array of therapeutic indications and a proprietary research/manufacturing platform should enable the company to sustain further growth” the analyst concludes. He has a $187 price target on GWPH for upside potential of 50%.