GWPH Stock Forecast: One Drug to Move Medical Marijuana Market Ev…

Epidiolex Stock Prices

Today marks a turning point in the marijuana market as the first ever FDA-approved cannabis drug, “Epidiolex,” is going to be the trailblazer for cannabis-derived medicines in the U.S. GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH) will supply the drug to the U.S. market via its subsidiary, Greenwich Biosciences Inc. With the drug on its way, the GWPH stock predictions are brightening up for the pharmaceutical company. So what does the GW Pharma stock forecast look like?

At the moment, things are little dour, but the long-term outlook is promising.

But first, let’s go over what happened with Epidiolex.

The epilepsy drug received approval by the U.S. Food and Drug Administration on June 25, with GWPH stock rising in anticipation. But the stock has in fact tumbled instead of rising, likely due to the run-up to the FDA approval, which saw the drugmaker’s stock spike for several months.

Despite the drawback and the effect it will have on the GWPH stock predictions (which we’ll cover below), this is an important day for medical marijuana stocks in general.

“This approval serves as a reminder that advancing sound development programs that properly evaluate active ingredients contained in marijuana can lead to important medical therapies,” said FDA Commissioner Scott Gottlieb. (Source: “US approves first marijuana plant-derived drug,” CNBC, June 25, 2018.)

In other words, this is a ringing endorsement of the restorative qualities of cannabis from the nation’s top medicine regulator. It shows a willingness from the federal government to move toward marijuana acceptance, something that will greatly benefit medical marijuana stocks.

After all, by accepting Epidiolex, the FDA is saying in no uncertain terms that there are benefits to be reaped from cannabis, and that will inspire further research and medicines.

Epidiolex is used in the treatment of epilepsy by making use of cannabidiol (CBD). CBD contains less than 0.1% of the notorious THC chemical, which is responsible for the high from the drug.

GW, based out of the U.K., grows its own supply of cannabis in specialized glass houses to ensure uniformity and even distribution among the genetic compositions of the plants. They are then processed into liquid CBD.

But while the FDA approval is a huge win for medical marijuana stocks—and the marijuana market more broadly—there are still some hurdles to vault.

First, the Drug Enforcement Agency (DEA) still classifies marijuana as a Schedule 1 drug, alongside heroin and other deadly substances.

As a Schedule 1 drug, the DEA considers marijuana to be deadly and without medical benefit. The FDA approval would force the law enforcement body to reconsider its stance, which GW expects to occur within 90 days.

If the drug is eventually removed from the Schedule 1 classification, that would be a huge win for the marijuana market as it would remove a huge barrier toward marijuana legalization in the U.S.

After all, being a Schedule 1 drug is partially what gives U.S. Attorney General Jeff Sessions such wide-ranging powers to enforce his draconian views of cannabis on states even where the drug is legalized.

Reclassifying the drug would go a long way toward hampering further interference from the federal government in states where marijuana is legal.

That would be a huge win for the entire U.S. marijuana industry and allow marijuana bulls to breathe a sigh of relief.

GW Pharma Stock Forecast

With the details now covered, let’s take a look at the GW Pharma stock forecast now that Epidiolex is FDA-approved.

The company is up about seven percent on the year, but with today’s decline of about two percent hardly what marijuana bulls want to see, GWPH stock is performing much as it has the whole year: unevenly.

Looking at the stock chart, you can see that the company’s 2018 has been characterized by large peaks and valleys.

Chart courtesy of StockCharts.com

The first significant drop for the company came when it came back with weak Phase 2a test results for its drug cannabidivarin (CBDV). CBDV is a cannabis-based molecule that GW Pharmaceuticals is currently evaluating for the treatment of people with focal seizures.

The CBDV test failure in Phase 2a showed little difference between the effects of the placebo given to the control group and the actual drug given to other participants in the experiment. (Source: “GW Pharmaceuticals Announces Preliminary Results of Phase 2a Study for its Pipeline Compound GWP42006,” GW Pharmaceuticals, February 21, 2018.)

What followed was a 10% decline in the GWPH stock value in a single day.

But the company was able to recover from that dismal outing as momentum built up toward the FDA approval of Epidiolex. But, as we can see from the stock charts and the weak performance today, the company was not able to parlay that momentum into sustainable gains, instead earning stock value on hype then losing it when the actual substance of the hype came to fruition.

Which is to say that investor excitement spiked GWPH stock too high and now the company has to take a hit.

Overall, however, GWPH stock is a steady performer, gaining about 37% over the past year. It’s important to note that as a large pharmaceutical company, GW provides a much different play versus traditional marijuana companies.

Characterized by lengthy drug approval processes and more muted, long-term gains, GW is not going to ever top the industry for massive growth, but it is one of the more stable companies due to its size and industry.

All that said, I expect to see steady if unspectacular gains moving forward to close out 2018.

Analyst Take

While GWPH stock has not necessarily benefited much from the FDA approval on the market, Epidiolex is still a very important drug.

Aside from the fact that it may be able to help people who once had no options to treat their conditions, it also opens the way for more companies to enter the market with cannabis-based drugs.

The whole industry is going to benefit greatly from that progress, even if the GWPH stock forecast will likely remain muted until the first sales of the drug begin rolling in.