The past few months have been rough, to say the least, for biotech GW Pharmaceuticals (NASDAQ:GWPH). Last month, the marijuana stock plummeted 17.7% after one of its seizure drugs, cannabidivarin compound GWP42006, failed to produce the expected results in a clinical study.
GW Pharmaceuticals’ attempts to treat epileptic seizures with a cannabidivarin compound are so far no more efficacious than a placebo. In effect, the drug did not fare better than its placebo in reducing focal seizures in study participants. Still, GW Pharmaceuticals is pressing forward in its hope of making GWP42006 a viable treatment for patients with epileptic seizures, as well as a potential treatment for symptoms associated with autism spectrum disorders.
An announcement last week of important news about Epidiolex, the lead product of GW Pharmaceuticals, passed virtually unnoticed by marijuana stocks investors.
The company’s lead product Epidiolex, on the other hand, seems to be on the right track. Last week, GW Pharmaceuticals came out with good news of positive development with Epidiolex, which arguably should have lifted these beaten-down marijuana stocks in a rebound of some kind. But, this was not how it played out, raising the question: why did this marijuana stocks news fail to impress investors?
To answer this question, one must understand the significance of GW Pharmaceuticals’ news. The company’s announcement revealed its success in obtaining notices of allowance from the U.S. Patent and Trademark Office (USPTO), signaling the USPTO’s decision to issue five more patents for Epidiolex. This was precisely the good news GW Pharmaceuticals had been waiting for, the potential shift that could make it once again a marijuana stock to invest in.
The news of five new patents issued for Epidiolex and potential control of the market in its sector for 10 years seems significant enough that it should have inspired more investments in the company’s marijuana stocks.
Still pending is FDA approval of Epidiolex, for the specific purpose of treating Dravet syndrome and LGS. Epidiolex, designated an orphan drug by the FDA, stands to receive exclusivity for seven years pending approval, which would offer the drug protection through 2025. The patents themselves won’t expire for another ten years past, in 2035.
What the issuance of these five patents could mean for GW Pharmaceuticals is a 10-year guarantee of owning the market for treating LGS and Dravet syndrome with CBD – and potentially, billions of dollars in profits.
Why was the news of the patents for marijuana stocks company GW Pharmaceuticals essentially ignored by the market? Three factors likely play a vital role.
#1: GW Pharmaceuticals had likely already assumed the patents’ approval and rolled this into its marijuana stocks price. The company had stated its confidence that Epidiolex would obtain approval for at least several key patents back in September.
#2: Marijuana stocks investors might not view these patents as the huge success that GW Pharmaceuticals does. Ten years of exclusivity won’t mean much if Epidiolex doesn’t live up to the commercial success predicted. There is concern that positive late-stage results reported from another biotech, Zogenix (NASDAQ:ZGNX), might threaten Epidiolex. Zogenix is also attempting to treat Dravet syndrome with its drug, ZX008; if successful, the company plans to file later this year for the drug’s regulatory approval. In that case, GW Pharmaceuticals’ CBD patents wouldn’t have bearing on ZX008, which is formulated with a low dose of fenfluramine.
#3: The marijuana stocks market may not be thinking straight. The stock market has been compared to that of an emotional, irrational and moody man by Ben Graham, the man who mentored Warren Buffet. This may be what is playing out currently with GW Pharmaceuticals’ marijuana stocks.
While the news last week did not garner the attention for which GW Pharmaceuticals’ marijuana stocks was hoping, it may yet prove of great importance for the company in the long run.
The prediction by some analysts is that FDA approval of Epidiolex will come this year accompanied by a successful launch on the commercial market. The need for treatment of LGS and Dravet syndrome remains and is recognized by patients, physicians and payers alike. The hope is that Epidiolex will help fill that unmet need.
Even if Zogenix offers solid competition in the treatment of epilepsy, the truth is that there is opportunity for more than one therapy to succeed. Multiple therapies can reach more patients, whose bodies may respond favorably to one treatment, but, not the other – or a combination of both. Competition aside, the most optimistic sales projections assumed Epidiolex could claim only 33% of the drug’s market share.
Saavy investors may notice GW Pharmaceuticals’ potential maturing in the coming years; perhaps the patents did not garner attention, but, FDA approval for Epidiolex will likely make this a great candidate for marijuana stocks to buy now.
(For more news on GW Pharmaceuticals, read Still on the Fence About Investing in Cannabis? Check Out This Marijuana Stocks Company.)