Why Marijuana Inventory GW Prescription drugs Soared 77% within the First Half of 2019


What occurred

GW Prescription drugs (NASDAQ: GWPH) inventory rocketed 77% increased within the first half of 2019 (January by means of June), in keeping with knowledge from S&P World Market Intelligence. It was flat in the course of the holiday-shortened first week of July, so its year-to-date 2019 acquire can be about 77%.

For context, the S&P 500 index returned 18.5% within the first six months of the yr, and has returned 20.6% up to now this yr by means of July 5.

The British biopharmaceutical firm develops prescribed drugs derived from cannabinoids, chemical substances present in marijuana.  

Overhead view of varied kinds of capsules mendacity on a floor with a marijuana leaf over them and three tablet bottles mendacity on their sides adjoining to the capsules.

Picture supply: Getty Pictures.

So what

GW Prescription drugs inventory’s year-to-date acquire got here within the first two months of the yr, as shares had been up 76.6% over this era. They’ve principally traded in a reasonably tight buying and selling vary since then. 

In January, shares surged greater than 46%, although there did not seem like any particular information to account for this massive acquire. As I beforehand wrote:

We are able to in all probability attribute the inventory’s sturdy efficiency [in January] largely to the passion surrounding the general cannabis sector. Practically all cannabis shares soared in January, with Canadian grower Cover Progress, the biggest cannabis inventory by market cap, skyrocketing 82.3%. 

In February, shares got here again for an encore, rising almost 21%. The catalyst was GW Prescription drugs’ launch of fourth-quarter outcomes that had been higher than anticipated. Income leaped 68% yr over yr to $6.7 million, beating the $5.35 million Wall Avenue was anticipating. Internet lack of $0.20 per share was flat with the year-ago interval, although it crushed the consensus estimate, which was for a lack of $2.90 per share.

The higher-than-expected outcomes had been pushed by the corporate’s sturdy U.S. launch for its cannabis-based drug Epidiolex. “For the 2 months in This autumn that the drug was out there within the U.S., gross sales tallied $4.7 million. Analysts had been broadly anticipating gross sales of about $Three million,” wrote my colleague Keith Speights. 

Epidiolex launched within the U.S. on Nov. 1 after receiving approval from the U.S. Meals and Drug Administration in June to deal with sufferers with two uncommon types of epilepsy. It is the primary drug derived from the cannabis plant (particularly from cannabidiol, or CBD) that is obtained the inexperienced mild from the FDA.

In Might, GW reported first-quarter 2019 outcomes that confirmed sturdy gross sales momentum. Income got here in at $39.2 million, together with $33.5 million in Epidiolex internet product gross sales within the U.S. — a lot increased than the $16.6 million analysts had been anticipating. 

Now what

As I’ve beforehand opined, “GW inventory’s course for the following couple years will possible extremely rely upon how nicely Epidiolex is promoting, so that is the important thing factor buyers ought to give attention to in fiscal 2019. Pipeline progress can be essential.”

GW has a number of catalysts for progress on the horizon, with essentially the most quick one being that it might obtain approval to market Epidiolex within the European Union. Information on this entrance might come anytime now. 

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Beth McKenna has no place in any of the shares talked about. The Motley Idiot has no place in any of the shares talked about. The Motley Idiot has a disclosure coverage.


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