Most cannabis-related companies have seen their stock prices tumble over the past few months, but a few have been more resilient. Although GW Pharma (GWPH) might not be a pot stock in the traditional sense, sales of the company's cannabidiol (CBD)-based drug, Epidiolex, have been growing at an impressive rate.

With the company's second CBD-based drug, Nabiximols, set to begin phase 3 trials soon, there's a lot of excitement surrounding GW Pharma right now. Some Wall Street analysts have recently revised their previous projections for the company, now predicting that GW's stock could end up doubling in the next year.

Is now the right time to buy GW Pharma? Let's find out.

Cannabis plant, oil, and seeds on a table.

Image source: Getty Images.

Epidiolex is doing great

GW Pharma's claim to fame is Epidiolex, a CBD-based drug that targets two rare types of epilepsy seen mainly in children, Lennox-Gastaut syndrome and Dravet syndrome. Epidiolex was big news for the cannabis industry as a whole, because it was the first drug containing an active ingredient from cannabis to be approved by the U.S. Food and Drug Administration (FDA) back in 2018.

Since then, Epidiolex sales have been the backbone of GW Pharma's revenue figures. During the company's first-quarter financial results, sales came in at $120.6 million, more than triple the $39.2 million reported at the same time a year ago. Epidiolex contributed $116.1 million of that total..

The drug's sales for the fourth quarter of 2019 came in at $104.5 million. That's an 11.1% increase over the course of a single business quarter, which is quite impressive.

Right now, the company is awaiting FDA approval for another indication, this time for the use of Epidiolex in patients with tuberous sclerosis complex (TSC). Considering the total addressable market for Epidiolex is about 45,000 at the moment, receiving this FDA approval for TSC would end up doubling the drug's total market of patients to 90,000 or so. In other words, Epidiolex sales could see a further surge in the near future if the FDA approves this new indication.

Another potential blockbuster?

Also on the horizon is GW Pharma's second CBD-based treatment, Nabiximols. The drug helps multiple sclerosis patients (MS) deal with spasticity, a common symptom that causes feelings of stiffness, difficulty controlling one's muscles, and sudden, sometimes painful spasms.

So far, GW Pharma has three phase 3 MS spasticity trials of Nabiximols outside the U.S. that have proven successful. The company also expects to begin five separate phase 3 MS trials in the U.S., with positive results from any of these likely leading to a New Drug Application (NDA) submission to the FDA.

Spasticity is a fairly common symptom for MS patients, with as many as 80% of all patients suffering from some degree of spasticity at one time or another. Given that there are about a million people in the U.S. diagnosed with MS, this is a potentially massive market for GW Pharma.

While it's still unknown how much Nabiximols will cost, it wouldn't be surprising if the company charges something near the $32,500 per year that Epidiolex costs. Considering the sheer number of MS patients who suffer from spasticity, GW Pharma could find itself with another major blockbuster on its hands.

Are there reasons to be worried?

While everything seems incredibly optimistic for GW Pharma right now, there is some competition emerging from rival pharmaceutical companies.

The FDA just recently approved a drug from Zogenix (ZGNX) called Fintepla. This drug happens to be approved for Dravet syndrome, making it a direct competitor with Epidiolex. Considering that Zogenix has already seen positive phase 3 trial results for Fintepla's ability to treat Lennox-Gastaut syndrome as well, it wouldn't be surprising if the drug receives FDA approval for this condition, too.

While this competing drug will likely siphon away some of Epidiolex's market share, receiving FDA approval to treat TSC will likely make up for any loss in revenue that would result from Fintepla. In the long term, I still think GW Pharma's future prospects look especially bright. Considering just how resilient the company has proven during this pandemic, coupled with its growth prospects for Epidiolex and Nabiximols, I think buying GW Pharma right now is a smart move.