GW Pharmaceuticals (GWPH) broke new ground when it won FDA approval for its marijuana-derived drug, Epidiolex, last year. Approved to treat two rare forms of epilepsy, Epidiolex launched in the U.S. last November after securing favorable scheduling from the Drug Enforcement Agency. The company unveiled its first-quarter financial results this week, providing investors with an initial look at the progress it's making commercializing Epidiolex. Here are five things you better know about its performance and future.
1. Sales were better than expected
The company reported first-quarter revenue of $39.2 million, including $33.5 million in Epidiolex net product sales in the United States. Industry watchers were expecting revenue of only $16.6 million.
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Epidiolex's better-than-expected results were supported by a few things: pent-up demand ahead of availability, a faster-than-anticipated conversion of trial patients to commercial patients, and the fact that Medicare and Medicaid coverage decisions kicked in in January.
The company also benefited from an increase in sales of Sativex, a THC-based marijuana medicine approved in Europe for multiple sclerosis spasticity. Its sales totaled $4.3 million, up 54% from last year.
2. Expanding insurance coverage
Epidiolex is now available to 90% of Americans insured commercially or through Medicare and Medicaid. Importantly, 65% of lives are being covered by less-restrictive pre-authorization criteria, such as PA to indication.
Plans covering Epidiolex through PA to indication only require a prescription be written by a specialist in the field for the FDA-approved indication, which, in this case, is Dravet syndrome or Lennox-Gastaut syndrome, a population totaling over 45,000 Americans.
In Medicaid, 99% of fee-for-service states have now issued a coverage decision, of which 67% incorporate either PA to indication or no prior authorization. For instance, Florida, Illinois, and New Jersey are covering Epidiolex without restrictions. Managed Medicaid decisions have also been made affecting 90% of members so far, with 40% of lives covered by PA to indication or a less restrictive criteria.
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3. A big decision fast approaching
Epidiolex isn't available in Europe yet, but that could change soon. A key European advisory committee is expected to make a recommendation regarding Epidiolex's use in the European Union this quarter. If the group recommends it, then an official EU approval is to be expected within 60 days thereafter.
It already has pricing and reimbursement in place in France and Germany, so GW Pharmaceuticals will launch Epidiolex in those countries first. If negotiations go well, it hopes to follow that up with a rollout in the United Kingdom.
4. A big label expansion opportunity
The company also reported phase 3 results that appear to support expanding Epidiolex's label to include use in the 50,000 or so Americans diagnosed with tuberous sclerosis complex, or TSC, a genetic disorder.
Ninety percent of TSC patients suffer seizures and about half of them fail to adequately respond to existing treatments. In its trial, Epidiolex reduced seizure frequency in TSC patients by 48.6% from a baseline 57 monthly seizures. That performance was far better than the 26% reduction witnessed in patients taking a placebo.
A filing to expand Epidiolex's label expansion to include TSC is on tap for the fourth quarter, suggesting an FDA decision will be announced in the middle of 2020.
5. Losses to continue
Epidiolex's sales are off to a solid start, but the company's spending far outstrips revenue, and that's likely to continue.
In Q1, management spent $30.4 million on research and development, and selling, general, and administrative (SG&A) expenses rose to $55.1 million from $26.2 million one year ago. When all was said and done, the company's net loss was $50.1 million in the quarter.
For the full year, GW Pharmaceuticals is forecasting operating expenses of $395 million to $425 million. Sales aren't likely to cover that, but GW Pharmaceuticals has wiggle room. It exited the quarter with $521.7 million in cash, plus it sold a priority review voucher for $105 million in April.
Overall, soaring sales, expanding insurance coverage, and an important clinical-trial win mean it was a solid quarter for GW Pharmaceuticals. However, risk-averse investors will probably want to see the company make more progress toward profitability in the coming quarters before buying shares.
