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Here's Why This Marijuana Stock Marched 10.6% Higher in June

By Todd Campbell – Jul 6, 2016 at 10:20AM

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Positive results from a late-stage trial in epilepsy suggest commercialization could be on tap in 2017.

Image source: GW Pharmaceuticals.

What: After reporting that its marijuana-derived drug Epidiolex reduced the number of monthly seizures in patients with Lennox-Gastaut syndrome (LGS), GW Pharmaceuticals Plc (GWPH) shares jumped 10.6% last month, according to S&P Global Market Intelligence.

So what: Earlier this year, a phase 3 trial in Dravet syndrome patients showed that GW Pharmaceuticals' Epidiolex can offer hope to tough-to-treat patients suffering with rare forms of epilepsy. In June, a second trial evaluating Epidiolex in LGS patients similarly panned out.

In the Dravet syndrome trial, patients given Epidiolex -- a purified version of CBD, the second most common cannabinoid in marijuana -- experienced a 39% drop-off in monthly seizures. That matched up favorably to patients given a placebo who only saw a 11% reduction in seizure rates.

The decline in seizures was similarly impressive in the LGS trial. Patients with LGS who were given Epidiolex had 44% fewer drop seizures per month. LGS patients given a placebo instead of Epidiolex saw the number of drop seizures decrease by 22%.

The findings are important because Dravet syndrome and LGS patients have few effective treatment options. Many of these patients don't respond adequately to typical medicines that work in other forms of epilepsy and as a result, there's a big need for new treatment options.

Now what: Momentum for the use of CBD to treat epilepsy has skyrocketed since Charlotte's Web, a marijuana strain that's high in CBD, was created to treat Charlotte Figi back in 2012.

Although anecdotal evidence has led to rising use of CBD-heavy strains of marijuana in epilepsy patients, GW Pharmaceuticals trials are the first large placebo-controlled studies to show that a purified CBD does indeed provide a benefit in epilepsy patients.

The company is awaiting data from two additional epilepsy trials (one each for Dravet syndrome and LGS), and assuming those trials back up findings to date, a filing for FDA approval of Epidiolex could be on deck in 2017. If approved, however, it's unclear just how big of a seller Epidiolex may prove to be: Dravet syndrome and LGS are relatively rare, and theoretically, the drug will be more expensive than CBD-heavy strains of marijuana available through medical marijuana dispensaries.

Nevertheless, Epidiolex appears to deliver top-notch efficacy and safety. If it gets the FDA's blessing, doctors worried over prescribing marijuana without the backing of regulators may embrace it quickly.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. Like this article? Follow him on Twitter where he goes by the handle @ebcapital to see more articles like this. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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