Two of the hottest biotech stocks on the market right now are GW Pharmaceuticals (GWPH) and Cara Therapeutics (CARA -3.19%). Shares of GW have soared more than 70% so far in 2019, while Cara is up more than 40%.

The two biotechs are at different places. GW Pharmaceuticals is busy with the launch of its second approved drug. Cara doesn't have a drug on the market yet but hopes to win approval for its lead candidate in the near future.

Which of these two stocks is the better pick for long-term investors? Here's how GW Pharmaceuticals and Cara Therapeutics stack up against each other. 

Two scientists working with a pipette and beaker in a lab

Image source: Getty Images.

The case for GW Pharmaceuticals

Investors want growth. GW Pharmaceuticals should be able to give them what they want.

The company won FDA approval last year for Epidiolex in treating Dravet syndrome and Lennox-Gastaut syndrome (LGS), both of which are rare forms of epilepsy. It marked the first FDA approval of a cannabis plant-based drug.

GW launched Epidiolex in the U.S. in November. So far, the cannabidiol (CBD) drug is off to a great start. The biotech reported Epidiolex better-than-expected sales of $4.7 million in its first two months on the market. But there are several reasons to think the situation will only get better for GW Pharmaceuticals in the coming quarters.

More states announced that Epidiolex will be covered under their Medicaid programs in January. GW is also continuing to reach out to more payers and physicians. And positive word of mouth among patients and physicians for the CBD drug is also likely to help increase sales.

The biotech also hopes to soon win European approval for Epidiolex. It's already getting ready for a major European launch of the drug.

In addition, GW could gain additional approvals in the U.S. and in Europe for other indications. The company could submit for FDA approval of Epidiolex in treating tuberous sclerosis complex by late 2019 if results from a phase 3 study are positive. GW is also close to starting another late-stage study of the drug in treating Rett syndrome, a neurological disorder caused by a non-inherited genetic mutation.

Several analysts think Epidiolex will be a blockbuster at its peak sales. Some expect peak annual sales of more than $2 billion. Other estimates are closer to $1 billion. It could help that the FDA recently refused to consider Zogenix's filing for approval of Fintepla in treating Dravet syndrome. The resulting delay should help GW firm up its market position for Epidiolex. 

The case for Cara Therapeutics

Why consider buying Cara Therapeutics? Here's a one-word answer: Korsuva. The biotech's lead pipeline candidate is currently in a phase 3 study targeting treatment of chronic kidney disease-associated pruritis (CKD-aP) in patients on hemodialysis.

We'll have to wait until later this year to learn the results from this phase 3 study. But there's a reason for optimism based on earlier clinical results for the intravenous drug in treating CKD-aP. If those results are positive, Cara should have a winner on its hands.

There currently are no approved drugs for CKD-aP. That alone gives Cara a wide-open opportunity. Even better, though, the company has already lined up a big partner.

Last year, Cara licensed commercialization rights for Korsuva outside the U.S., Japan, and South Korea to Vifor Fresenius Medical Care Renal Pharma. The company's partner is a joint venture formed by drugmaker Vifor Pharma and large dialysis services provider Fresenius Medical Care. This deal also had an added bonus for Cara. Fresenius plans to promote Korsuva in all of its U.S. dialysis clinics.  

Investment firm Jefferies projects that Korsuva could rack up annual sales of around $573 million at its peak in treating patients with CKD-aP who are on hemodialysis. However, Cara doesn't plan on being limited to this one indication. The company is testing an oral version of Korsuva in a phase 2 study for treating patients with CKD-aP who aren't on dialysis. It also is hoping for success with the drug in treating chronic liver disease-associated pruritis (CLD-aP).

Better buy

GW Pharmaceuticals is definitely the less risky of the two biotech stocks. Epidiolex is already on the market and is performing well in the early stage of its U.S. launch. It's possible that Cara's clinical studies for Korsuva won't be successful.

However, much of the growth potential for GW is already priced into its stock. The company's market cap is over $5 billion. If Epidiolex only hits the lower end of projected sales ranges, GW is fairly priced right now.

Cara Therapeutics, on the other hand, has a market cap of around $775 million. If the company reports positive phase 3 results for Korsuva in CKD-aP patients on hemodialysis, I think the stock could easily double -- and perhaps move even higher.

Again, Cara is riskier than GW Pharmaceuticals. But I'm cautiously optimistic about its chances. For that reason, I think Cara is the better buy for aggressive investors.