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How GW Pharmaceuticals Hit a Home Run in Q1

By Keith Speights - May 12, 2020 at 7:02AM

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Nearly everything that could go right went right for the cannabis-focused drugmaker.

Like many stocks, GW Pharmaceuticals (GWPH) took a beating in the coronavirus-fueled market sell-off earlier this year. However, GW's shares bounced back and have largely recovered. That recovery should now pick up even more steam.

GW Pharmaceuticals announced its first-quarter results after the market closed on Monday. And those results were exactly what investors hoped for. Here's how GW hit a home run in Q1.

Epidiolex bottle and package

Image source: GW Pharmaceuticals.

By the numbers

GW Pharmaceuticals reported first-quarter revenue of $120.6 million, more than tripling year over year. This result also easily topped the average analysts' Q1 revenue estimate of $109.4 million.

The company announced a net loss in the first quarter of $8 million, or $0.02 per share. In the prior-year period, GW posted a net loss of $50.1 million, or $0.14 per share. GW blew past the consensus Wall Street estimate of a Q1 net loss of $0.85 per share.

GW ended the first quarter with cash, cash equivalents, and short-term investments of $500.9 million. The drugmaker's cash position stood at $536.9 million as of Dec. 31, 2019.

Behind the numbers

As usual, GW Pharmaceuticals' first-quarter results were driven nearly entirely by Epidiolex. Net product sales for the drug totaled $116.1 million in Q1, with $106.1 million of this amount generated in the U.S. 

The company recently launched Epidiolex in Germany and in the United Kingdom. GW referred to both of these launches as "successful" so far. However, it's still making progress on pricing and reimbursement in Germany.

GW's business wasn't impacted too much by the COVID-19 pandemic in the first quarter. CEO Justin Gover said that the company has "been able to support the epilepsy community remotely and maintain production of Epidiolex." The biggest effect on the company from the coronavirus outbreak was that it had to delay the start of new clinical programs until the second half of the year.

One concern in GW's fourth-quarter update was that its bottom line trended in the wrong direction. That wasn't the case in the first quarter, though. The company's net loss improved from both the prior-year period and the previous quarter.

Looking ahead

While GW Pharmaceuticals is rightly categorized as a cannabis stock, it's also a biotech stock. As such, its fortunes are driven largely by pipeline progress. There could be some good news on that front on the way.

While the COVID-19 pandemic has temporarily halted recruitment for clinical studies, GW should soon resume efforts. The company expects to move forward with its late-stage study of Epidiolex in treating Rett syndrome. It plans to kick off a late-stage U.S. study evaluating nabixomls (Sativex) in treating multiple sclerosis spasticity in the second half of the year. GW also has several early and mid-stage studies planned for cannabinoid drugs.

Most importantly, GW hopes to win FDA approval by July 31, 2020, for Epidiolex in treating a new indication, tuberous sclerosis complex (TSC). If all goes well, the company intends to launch the drug for the TSC indication in August. GW has also submitted for regulatory approval of the drug in treating TSC in Europe.

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