Why is GW Pharmaceuticals a Strong Buy?
Cannabis stocks continue to soar after five states in the US legalized marijuana use on Friday, November 6. Stocks like Aurora Cannabis (NYSE: ACB) rose because the announcement acted as a lifeline to the much-troubled company.
However, apart from Aurora, several other cannabis companies have been steadily building up their businesses and have much stronger balance sheets. GW Pharmaceuticals (NASDAQ: GWPH) is one such company – but why is GW Pharmaceuticals a Strong Buy?
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The cannabis-based biopharma company reported its numbers for the third quarter of 2020 ended September 30, 2020, and they blew analysts’ expectations out of the water. Total revenue for the quarter came in at $137.1 million compared to $91 million for the same period last year, a jump of over 50%. The first nine months of 2020 saw revenue worth $378.6 million compared to $202.3 million in 2019. Net loss also reduced to $12.2 million compared to $13.8 million in 2019.
The company posted a loss of $0.04 per share, much better than analyst expectations of $0.83 per share. GW is also sitting pretty on cash and cash equivalents of $480.3 million at the end of Q3.
GW stock zoomed over 21% after the company announced its Q3 results. When the US legalization announcement came out, the stock got an additional 4.08% bump to close at $114.64.
Okay, GWPH stock continues to climb – but why is this hemp stock a strong buy now?
GWPH: Continued Success with Epidiolex
Epidiolex (GW Pharmaceutical’s flagship drug) sales came in at $132.6 million, up 12.7% from $117.7 million worth of sales in Q2 2020.
During the earnings call, GWPH CEO, Justin Gover said, “We are pleased to report strong revenue growth in the 3rd quarter despite the challenges presented by COVID-19. Epidiolex meets a serious unmet need within the field of epilepsy and we expect the product to demonstrate continued strong growth in the months and years ahead.”
This is good news for GW investors after the FDA approved the drug to treat tuberous sclerosis complex (TSC). The approval came through in August this year and Gover stated, “Receptivity to-date has been very positive, and we believe that this indication will offer strong support to the commercial momentum of Epidiolex as we move through the remainder of the year and into 2021.”
Bottom Line: What is next for GW Pharmaceuticals? Why is GWPH a Strong Buy?
On November 3, GW Pharma, along with U.S. subsidiary Greenwich Biosciences, announced that it has initiated the first U.S. Phase 3 clinical trial studying nabiximols for multiple sclerosis (MS)-associated spasticity. Nabiximols is known as Sativex outside of the US and approved for use to treat MS spasticity in over 25 countries.
Positive results from three previous European Phase 3 clinical studies show nabiximols was well-tolerated and provided continued reductions in patient-reported spasticity for individuals with MS. This Phase 3 trial is one of five pivotal studies planned for nabiximols in MS spasticity, with the remaining studies on track to commence either later this year or in 2021.
“We are excited that the U.S. Phase 3 clinical program evaluating nabiximols in Multiple Sclerosis spasticity is now recruiting patients, after a delay due to COVID-19. Given the rigorous studies already conducted on the medicine outside of the U.S., and positive discussions with the FDA, we believe that we have a clear path to an NDA submission, potentially as soon as next year, and a significant second product opportunity for GW in the U.S.,” said Justin Gover.
Analysts have revised GWPH’s stock price expectations after the results and now have a 12-month target price of $184. That’s an upside of over 60% from the current price.
GW Pharmaceuticals has a pipeline of products that are set to be launched in the near term, and it is increasingly looking like a very attractive hemp stock to buy and hold over the long term.
We believe GW Pharmaceuticals is a strong buy and certainly one of the best hemp stocks to add to your portfolio.
Why is GW Pharmaceuticals a Strong Buy?
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