GW Pharmaceuticals (NASDAQ:GWPH) got the second win it needed. Success for Epidiolex in the first of two studies in Lennox-Gastaut syndrome helped push its already sky-high valuation up another 13% as the cannabis-based treatment now looks to be effective in a wider spectrum of treatment-resistant epilepsies.
Results from a confirmatory Lennox-Gastaut trial are due before October, but with a robust-looking benefit in seizure reduction shown in this first trial it would be a bombshell if the second were to fail. Regulatory filings are due early next year, and the group is ploughing ahead with a plan for solo launch.
Brexit? What Brexit?
GW provided a pinprick of light in an otherwise dark post-Brexit London trading day, with its shares nearly touching their record high of £6.76 – set just over a year ago – shortly after the news was announced in-market. By the time the US market opened the group's US-listed shares were up 10%; Leerink research raised the price target of US shares from $130 to $138, compared with the $92.52 they were trading mid-morning today.
In Lennox-Gastaut Epidiolex was able to reduce the frequency of drop seizures by 44% during a 14-week treatment period, compared with a 22% reduction seen in patients taking a placebo. All 171 patients were on at least one other anti-epileptic drug, with the average subject taking three and having failed to achieve control on an average of six others.
The company did not disclose data beyond the topline primary endpoint. Chief executive Justin Gover told EP Vantage that detailed data from this and the second Lennox-Gastaut trial would be ready for presentation at the American Epilepsy Society meeting in December.
This news follows Epidiolex’s success in a Dravet syndrome trial, which like Lennox-Gastaut is a rare form of epilepsy that develops in early childhood (GW takes traders back to 2015, March 14, 2016). The Lennox-Gastaut population is much bigger, however, estimated at 37,000 in the US and Europe, compared with 12,000 Dravet patients.
As it stands, GW’s $2bn market cap is well above the combined $806m net present value of its marketed and R&D projects, as calculated by EvaluatePharma using a consensus of sellside analyst forecasts. This mismatch suggests that investors and analysts have wildly different views on the promise of Epidiolex, or that traders are assuming that GW will be taken out.
The latter hypothesis could explain why GW has chosen to preserve all of the economics of Epidiolex by planning for a solo launch. Mr Gover said today that development of a US commercial operation was well under way, with Europe close behind.
A small player might struggle with a target audience of 4,000-5,000 specialists – though GW's $276m of cash as of March 31 would help – but this would be more within the capability of a big or speciality pharma buyer.
On the other hand, a cannabis-based product raises the issue of an extra layer of regulation that big pharma might rather steer clear of. In which case planning for a commercial launch looks perceptive, although a more modest view of Epidiolex’s promise could emerge if this is GW’s end game.