Cantor Reiterates Bullish View On GW Pharmaceuticals Following Earnings

Following its results for the first quarter of fiscal 2019, analysts at Cantor Fitzgerald provided an update about GW Pharmaceuticals plc (NASDAQ: GWPH).

The Analyst

Cantor Fitzgerald analysts Elemer Piros and Kristen Kluska reiterated the Overweight rating and $193 price target on GW Pharmaceuticals.

The Thesis

The analysts pointed out the initial sales of GW Pharmaceuticals' Epidiolex drug, which amounted to $4.7 million for the two-month period since the launch on Nov. 1. Sales were significantly higher than Cantor's estimates of $800,000.

Cantor analysts also highlighted the strong demand for the drug, including 4,500 new patient enrollment forms. In 60 days, GW Pharma reps reached 70 percent of their target audience. Beginning in January, Epidiolex became available in 130 distribution points, up from five in late 2018, which suggests an easier access and higher sales as a result.

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The launch of Epidiolex in Europe could also be a major catalyst for Epidiolex's stock. GW Pharma plans launch the drug in Europe in 2020.

Cantor also took into account the pipeline progress that GW Pharma provided in its earnings report. The company expects to release pivotal data from a third epilepsy indication, Tuberous Sclerosis Complex in the second quarter.

Epidiolex is prescribed for two types of epilepsy, Lennox-Gastaut and Dravet syndromes. If the study for Tuberous Sclersosis Complex is successful, GW Pharma could submit an NDA in the fourth quarter of 2019.

In this way, Cantor's sum-of-risk-adjusted NPV for Epidiolex yields a value of $5 billion or ($165 per share) after-tax and discounted at 15 percent. Adding $500 million for the drug portfolio and $367 million in estimated cash for the fourth quarter of 2019, the company's value is $5.9 billion, which results in the $193 per share price target.

The stock traded higher by 13.8 percent Wednesday to close at $173.99 per share.

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