What happened?

Shares of GW Pharmaceuticals (NASDAQ:GWPH) are up by 4.8% as of 3:18 p.m. EDT on Monday, after rising by as much as 5.5% earlier in the day. The catalyst for these nice gains is the fact that the U.S. Food and Drug Administration (FDA) approved GW Pharma's Epidiolex for the treatment of seizures associated with tuberous sclerosis complex (TSC).

So what

Back in June of 2018, Epidiolex was approved for the treatment of seizures associated with Lennox-Gastaut syndrome (LGS) and Dravet syndrome, thus becoming the first cannabis-derived drug to be approved by the FDA. And although Epidiolex had a successful first year (or so) on the market, the drug's quarter-over-quarter sales growth has been slowing noticeably. Thanks to this new indication, Epidiolex's sales growth will likely increase in the coming quarters.

Two cannabis leaves on top of a $100 bill

Image source: Getty Images.

GW Pharma estimates that there are between 40,000 and 50,000 TSC patients in the U.S. (and between 1 million and 2 million worldwide), more than 90% of whom suffer from seizures. Further, the cannabis company argues that more than 60% of these patients do not achieve seizure control with alternative therapies. In other words, there's an unmet need within this market, and Epidiolex could be the answer. The drug could generate several hundred million dollars in sales within this indication alone. 

Now what

With today's gains, GW Pharma's stock is up by almost 28% year to date. The company could continue to outperform the market, especially if the launch of Epidiolex as a treatment for seizures associated with TSC is as successful as its initial launch was. In short, now may be a good time to consider buying shares of GW Pharma.