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GW Pharma inches closer to drug launches

The cannabis-based drug company has received positive clinical results.
May 6, 2016

Positive clinical trial results announced towards the end of its March half year, have allowed GW Pharmaceuticals (GWP) to initiate the filing process for a "new drug" application with the US food and drug administration. The drug in question, Epidiolex, is targeting two severe forms of childhood epilepsy - a major unmet clinical need - and, slightly controversially, uses cannabis derivatives as an active ingredient.

IC TIP: Buy at 444p

The final drug submission is expected in the second half of 2017 as GW is awaiting further results from Epidiolex in a second indication of epilepsy, Lennox-Gastaut syndrome, with results from these trials expected by the third quarter of the current financial year.

The period has also seen the conclusion of a partner-funded clinical trial for Sativex, a drug for cancer pains. GW had received income from its partner Otsuka during the process, but disappointing results have put these trials on hold, effectively leading to an £8m drop in revenue during the period. This, combined with a threefold increase in net cash outflows due to the high costs of clinical trials, placed extra strain on the balance sheet, but given GW's strong investor backing we are unconcerned about future funding.

Following the trial results, broker Edison increased its valuation by 11 per cent to $2.04bn (£1.41bn), equivalent to 534p a share.

 

GW PHARMACEUTICALS (GWP)

ORD PRICE:444pMARKET VALUE:£1.17bn
TOUCH:442-444p12-MONTH HIGH:708pLOW: 211p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:82pNET CASH:£193m

Half-year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201514.3-39-4.6nil
20166.3-35-13.2nil
% change-56---