GW Pharmaceuticals Raising Target Price to $22

GWPH : NASDAQ : US$15.20
Target: US$22.00

GW Pharmaceuticals is focused on discovering, developing and commercializing cannabinoid pharmaceutical-grade drugs. Lead
product Sativex is an oromucosal spray to treat MS symptoms, cancer pain, and neuropathic pain, now approved in the EU and
other ex-US territories, and in Ph3 program for cancer pain. It has two product candidates in Ph2 trials in diabetes and
inflammation, and earlier stage programs for epilepsy and psychiatric illness.
All amounts in US$

Investment recommendation

Reiterate BUY, raising price target to $22 on the potential of GW’s platform and Sativex’s market opportunity in US cancer pain. We think Sativex could be a key add-on Tx for moderate/severe cancer pain and expect Ph3 data due mid-2014 to be positive, support US approval and drive market uptake. We estimate peak sales in the US and EU of $2+B. We also think Sativex has potential in MS spasticity, for which it is already approved in the EU. Our new $22 price target is based on a lower discount rate applied to our sum-of-the-parts analysis of a pipeline pNPV and EU Sativex DCF.
Investment highlights
 Significant new investor interest as Sativex cancer pain pivotal data approaches. We have had a number of positive recent
investor conversations around the potential for the Ph3 Sativex cancer pain data due in mid ’14.
 More data, partner promotion adds to Sativex’s potential in MS spasticity. Almirall appears to be picking up its promotion of Sativex for MS at this years’ ECTRIMS meeting (we note a sponsored Symposium), as more country launches occur (e.g.
France, Italy and Spain). We still await resolution of the price negotiations in Germany, a major EU market.


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