Marijuana and opioids have been used to treat serious ailments for an awfully long time, and they're about to get some important upgrades. Some investors are convinced GW Pharmaceuticals PLC (NASDAQ:GWPH) and Cara Therapeutics Inc. (NASDAQ:CARA) have found the right way to improve on some old favorites.

With one about to launch the first FDA-approved drug extracted from marijuana and the other developing an itch-relieving opioid, investors are right to wonder which stock is the better option. To decide, let's look at the different directions they're about to take.

Person deciding between two directions.

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The case for GW Pharmaceuticals PLC

There are around 2.2 million Americans living with epilepsy and around one-third of them keep having seizures despite using one or more of today's standard therapies. On the surface, GW Pharmaceuticals looks like a great stock to buy because it recently earned approval for a new class of anti-epileptic drugs, and it appears to work when others don't. 

Epidiolex is purified cannabidiol (CBD) extracted from real marijuana. Since CBD doesn't make patients high, the Drug Enforcement Agency recently placed it in the least restrictive schedule of the Controlled Substances Act, which makes it the only CBD Americans can purchase legally under federal law.

For a small population with two forms of childhood-onset epilepsy, Epidiolex is about to make a big difference. Earlier this year, investigators showed that a majority of Lennox-Gastaut syndrome patients who added Epidiolex to other treatments experienced a 41% reduction, or better, to their seizure frequency. When you consider the median patient was experiencing 74 drop seizures per month at the beginning of the study, strong demand seems more than reasonable.

Investors need to realize that less than 1,000 children are diagnosed each year with disorders that Epidiolex is approved to treat in the U.S. and that might not drive sales high enough to support the company's recent $4.3 billion market cap. In order for this stock to continue rising, GW Pharmaceuticals needs to convince investors that Epidiolex can generate sales beyond its limited indications, which won't be easy.

Insurers are hesitant to cover expensive off-label treatments, which could drive plenty of adults to seek a less expensive option. That could be a problem because non-FDA-approved CBD is already a big industry, and many patients who use it to treat epilepsy are convinced that it works much better when mixed with cannabinoids that Epidiolex doesn't contain. To top it off, a formulation of fenfluramine being developed by Zogenix recently produced impressive results for a group of patients with Dravet syndrome, one of two forms of epilepsy that Epidiolex is approved to treat.

Pills and a syringe lying on top of a pile of cash.

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The case for Cara Therapeutics Inc.

Cara Therapeutics doesn't have any drugs to sell yet, but that could change following a couple of pivotal studies involving patients with chronic kidney disease who suffer from intense itching. This is a growing population with an unmet need, and as its first specific treatment option, Korsuva could lead to several hundred million in annual sales for the company's top line.

At the moment, Korsuva is in two pivotal studies to see if it can improve itch intensity ratings, which is something it's already accomplished in a mid-stage study. In fact, the treatment led to a 68% greater reduction from baseline in itching intensity compared with the placebo group.

Earlier this year, Cara inked an agreement with Fresenius Medical Care, a leading dialysis service provider that wants to offer Korsuva injections to its patients in return for a share of the sales. With Fresenius lending a helping hand, Cara's cash reserves could last through an ongoing pivotal study, and an FDA review. Following a stock offering earlier this year, the company thinks it can cover expenses into 2021 regardless of whether or not its collaboration partner provides significant milestone revenue.

Korsuva might not be considered a potential blockbuster the way Epidiolex is, but it doesn't need to be in order to push Cara Therapeutics shares higher. With a relatively modest market cap of $827 million at recent prices, moderate success in the dialysis market alone could lift the stock in the years ahead.

Before long, Cara should have results from another ongoing pivotal study to see if an intravenous version of Korsuva has a place in the post-abdominal surgery setting. It provided significant pain relief during a mid-stage study, and independent monitors recently gave the thumbs-up during an interim assessment.

The better buy

There's plenty of interest in how well Epidiolex will perform on the market, but well-heeled partners have kept their distance. Reasons vary, but investors should know that new drugs launched without a big partner to do the heavy lifting have a tendency to disappoint.

Although there's also a chance that Korsuva won't make it across the finish line, the odds of a less-than-thrilling launch for Epidiolex seem far greater. That makes Cara Therapeutics the better stock to buy at the moment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.