GW Pharamaceuticals BUY Target Price $ 102

GWPH : NASDAQ : US$69.81
Target: US$102.00

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$ unless otherwise noted.


Life Sciences — Biotechnology
Investment recommendation
Reiterate BUY, raising target to $102 from $65 on addition of
Epidiolex potential in Dravet’s and Lennox-Gastaux to model. We
now add intractable pediatric epilepsy to our model based on the
new Dravet’s IND and clinical path. Our $102 target is based on a
sum-of-the-parts analysis of a pipeline pNPV and EU Sativex DCF.
Investment highlights
 $(0.56) EP/ADS vs consensus of $(0.34); our $(0.34) estimate. Q2
revenue was $12.6M vs. $12.9M consensus; our $13.0M
 Positive FDA guidance meeting, new IND gives major clarity on
clinical path forward. The pre-IND meeting, held Feb 2014,
confirmed investigational CMC standards, the upcoming Phase
2/3 two-part, placebo controlled trial design, and utility of future
open-label safety data. The IND is now open and we anticipate
trial start in H2/14 (details later in the note). Market potential in
Dravet’s and Lennox-Gastaux comprises $62 of our valuation.
 Upcoming catalysts for Sativex in cancer pain, ulcerative colitis
(UC) and Glioma. We think there is strong POC for activity of
THC/CBD in the gut; and we think Ph2 UC trial (data due H2/14)
has a high chance of success with excellent market potential.
First Ph3 data from the US Sativex cancer pain studies are also
due around the end of 2014. Safety data for a Ph1/2 trial in
Glioma are expected on an initial cohort this year


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