I recently wrote about what could be the five biggest new drugs of 2018. There wasn't a marijuana-related drug on the list. But that's just because I stopped at the top five. Had I gone further, it would be a different story.

Market research firm EvaluatePharma looked at all of the potential new drugs that could be launched in 2018 and ranked them by their projected sales in 2022. Coming in at No. 10 on the list was Epidiolex, a cannabidiol (CBD) drug developed by GW Pharmaceuticals (GWPH) for treating two rare types of epilepsy. Could a marijuana-based drug really be one of the biggest success stories of the year? It just might.    

Launch spelled out in wooden cubes

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The countdown is on

GW Pharmaceuticals completed its submission of a New Drug Application (NDA) for Epidiolex in October. The NDA was for two forms of childhood-onset epilepsy -- Lennox-Gastaut syndrome (LGS) and Dravet syndrome. In December, the FDA accepted the NDA. Even better, the agency granted priority review status to Epidiolex, which speeds up the review process. 

The countdown is now on. An approval decision for GW's CBD drug is expected by June 27. It could even come more quickly than that, but I wouldn't count on it. As it stands now, the FDA will hold an advisory committee meeting to discuss the application for Epidiolex. This isn't an unusual step, though.

What are the chances for Epidiolex winning FDA approval? Pretty good. Around 90% of drugs for which an NDA is submitted gain approval. Many of those approvals rely on one late-stage clinical study. GW Pharmaceuticals, though, conducted three phase 3 safety and efficacy studies, all of which met their primary endpoints. The company also submitted safety data for close to 1,500 patients, with roughly 400 patients of them on continuous therapy for more than one year. 

Assuming Epidiolex does get a thumbs-up from the FDA, there is another regulatory hurdle. Because CBD is a controlled substance under U.S. federal law, the Drug Enforcement Administration (DEA) will require Epidiolex to be scheduled. 

Marijuana buds in test tube

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GW Pharmaceuticals completed a human abuse liability study for CBD in 2017. The company hopes this data will convince the DEA to categorize Epidiolex as a Schedule IV drug, a classification reserved for drugs with low potential for abuse. Marijuana itself is a Schedule I drug, which means that it is deemed to "have no currently accepted medical use in the United States, a lack of accepted safety for use under medical supervision, and a high potential for abuse." 

DEA scheduling should be completed within 90 days of FDA approval. GW has already discussed Epidiolex with the agency, and the company doesn't anticipate any problems with the process. If all goes according to plan, Epidiolex should be launched in the U.S. by October, if not sooner. 

Commercial potential

Several factors play into how well a new drug performs. First, there must be a market need. GW Pharmaceuticals should be in good shape on that front. There are currently no FDA-approved treatments for Dravet syndrome. While there are approved treatments for LGS, many patients develop a resistance to initial medications. 

The second factor is related to the first one. Sales for new drugs are higher when there isn't significant competition. Epidiolex will face competition from approved treatments and off-label use of drugs not approved for treating LGS and Dravet syndrome. However, because so many patients end up switching therapies, competition shouldn't be a big obstacle for Epidiolex's success -- at least not initially.

Two boxing gloves hitting each other

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What about a new drug hitting the scene, though? Zogenix (ZGNX) announced solid results in September from its late-stage study of ZX008 in treating Dravet syndrome. The biotech has another late-stage study to complete for the drug, which isn't a cannabinoid. At the earliest, Zogenix could file for FDA approval by late 2018. Still, though, because of the high percentage of patients who move from one treatment to another, there should be plenty of room for both Epidiolex and ZX008 to be successful commercially. 

The third factor is convincing payers to cover a new drug and actually provide reimbursement for it. GW Pharmaceuticals has already hit the ground running in its efforts to convince the payer community. Julian Gangolli, GW Pharmaceuticals' president of North America, said in December that the company is meeting one-on-one with payers. The biotech's CEO, Justin Gover, also stated that the talks have gone well and that he didn't think payers will "impose any onerous prior authorization requirements" on Epidiolex.

Sales estimates for Epidiolex have ranged from $300 million to more than $2 billion. EvaluatePharma projected that the drug would generate sales of close to $1 billion by 2022. I think that's realistic. And it would certainly be enough to make Epidiolex one of the biggest new drug launches of this year. 

Taking stock

What does all this mean for GW Pharmaceuticals stock? The biotech's market cap currently stands at close to $3.7 billion. If Epidiolex can hit the $1 billion sales mark or close to it, GW Pharmaceuticals should have some room to go higher.

And we've only talked about Epidiolex in treating LGS and Dravet syndrome so far. GW is targeting other indications for the drug and has additional pipeline candidates. The stock gained 18% in 2017. I think with the likely approval for Epidiolex and possible good news from the pipeline, GW Pharmaceuticals stock should enjoy a better year in 2018.