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GW Pharma finds a new high

RESULTS: GW Pharma gets a kick from listing in the US as it waits for key trial results on cannabis-based drug Sativex

GW Pharmaceuticals (GWP) took the unusual step earlier this year of adopting a listing on the Nasdaq exchange as a way of expanding its shareholder base and escaping what had become a subdued market for biotech shares in the UK. Despite the feeling that the cannabis-based medicines specialist paid through the nose for the privilege of a new ticker (GWPH), management can point to the fact that the average number of shares traded in a day has jumped from 80,000 to almost 1 million.

IC TIP: Hold at 171p

The extra liquidity is one reason for the recovery in the share price, but the settlement of legacy issues has also helped investors mellow towards the company. For example, a dispute over reference prices for Sativex in the key German market, where health insurers were refusing to reimburse the product, was resolved, though GW had to cut the wholesale price for Sativex in return for a new £9.8m 'milestone' payment. This explains the 14 per cent decline in Sativex sales to £2.2m, despite a 51 per cent increase in product shipped.

Pricing should improve when the results of the key Phase III trials evaluating Sativex's effectiveness at treating cancer pain are known. The trials will report in the second half of 2014.

Broker Peel Hunt forecasts pre-tax losses of £9.7m for next year, giving EPS of -4.8p.

GW PHARMACEUTICALS (GWP)

ORD PRICE:171pMARKET VALUE:£304m
TOUCH:170-171p12-MONTH HIGH:183pLOW: 39.5p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:20p*NET CASH:£38.1m

Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200924.11.201.2nil
201030.74.603.6nil
201129.62.532.1nil
201233.11.241.9nil
201327.3-10.36-3.0nil
% change-18---

Ex-div:-

Payment:-

*Includes intangible assets of £5.21m, or 3p a share