With GW Pharmaceuticals (GWPH) approaching the U.S launch of its long-awaited Epidiolex epilepsy medicine, the space for cannabis-based drugs to treat the disorder and other maladies is finally moving into reality.
London-based GW Pharma said Monday (June 25) the U.S. Food and Drug Administration (FDA) has approved Epidiolex, a cannabinoid-based oral solution for the treatment of seizures associated with Lennox-Gastaut syndrome (LGS) or Dravet syndrome -- both rare forms of epilepsy -- in patients at least two years old.
This milestone effectively brightens the spotlight on GW Pharma and at least three other stocks -- Nemus Bioscience (NMUS) , Zynerba Pharmaceuticals (ZYNE) and Insys Therapeutics (INSY) -- as companies developing medicines derived from marijuana.
"This decision sets a precedent for other companies seeking to bring to market a cannabis-based product," said Matt Karnes founder and managing partner, GreenWave Advisors, a New York-based legal cannabis research firm. "It bodes well for Nemus, Zynerba and Insys."
For the most part, the cannabis stories on these stocks have been well known to investors. So when the news broke about the FDA approval, GW Pharma shares dropped along with overall weakness in equities during the session on Monday.
In Tuesday trading, GW Pharma was up 1.2% to $146.51, Nemus Bioscience traded about flat at $0.28, Zynerga Pharma rose 4% to $10.92 and Insys Therapeutics dropped 2.4% to $7.72.
One bureaucratic hurdle remains for Epidiolex, however. While CBD has no psychoactive properties, it is still derived from marijuana, which remains classified as a Schedule 1 drug under federal law, with no therapeutic or medicinal attributes.
GW Pharmaceuticals said it expects federal authorities to de-schedule Epidiolex within 90 days.
Speaking to this process, Karnes said Epidiolex calls to question the suitability of current DEA scheduling of cannabis as a drug with no health benefits."The approval of Epidiolex contradicts the negative longstanding view and will likely prompt pressure for a change to the current DEA scheduling," Karnes said.
A DEA spokesperson did not return a phone call from Real Money.
With cannabis-based pharmaceuticals now approaching commercialization, investors will likely be hearing more from these companies:
As a specialist in marijuana-derived medicines for forms of epilepsy and other illnesses, London-based GW Pharma has had an eye on the U.S. market shortly after its inception 19 years ago.
It has been working on the launch of Epidiolex for years, culminating in successful Phase 3 trials of the drug in 2016.
GW Pharma has already commercialized the world's first plant-derived cannabinoid prescription drug, Sativex, for the treatment of spasticity due to multiple sclerosis. It is now sold in numerous countries outside the U.S.
Looking ahead, GW Pharma is planning a U.S. Phase 3 trial for Sativex, along with a pipeline of cannabinoid product candidates, which includes compounds in Phase 1 and 2 trials for epilepsy, glioblastoma, and schizophrenia.
For now, while GW Pharma generates some revenue, the company has not yielded any net income. However, it is well capitalized for the launch of Epidiolex and other products via $260 million it raised in a December offering of American Depositary Shares.
A tiny company with a market cap of $38 million, Nemus Bioscience offers an interesting story but no revenue as of yet.
The Costa Mesa, Calif company plans to develop and sell therapeutic medicine from cannabis through a partnership with the University of Mississippi, a federally permitted and licensed cultivation facility for research and commercial applications of pot.
The company has been operating since 2014 under three licensing agreements with the university for UM 5050, a formulation of THC, and other drugs.
In February, investment firm Emerald Health Sciences Inc. closed a $1.75 million private placement in Nemus Bioscience, to support its efforts to develop treatments for glaucoma and dry eye syndrome.
In recent months, Insys has shifted from a focus on opioids medicines to cannabinoids.
It is currently conducting Phase 3 trials on CBD medicines to treat infantile spasm, as well as Phase 2 trials for childhood absence epilepsy and Prader-Willi syndrome. It is also collaborating on autism research with UC San Diego's Center for Medicinal Cannabis Research.
Insys is considering research partnerships on addiction, childhood schizophrenia and post-traumatic stress disorder. It also sells Subsys, an opioid-based pain medication for cancer patients.
In its most recent quarter, Insys rang up a net loss of $20 million and revenue of $23.9 million. At last check, its market cap totaled about $583 million.
Zynerba Pharmaceuticals continues to develop transdermal cannabinoid treatments for rare neurological and psychiatric disorders.
Its lead product candidate is ZYN002 transdermal CBD gel, currently in Phase 2 studies in patients with developmental and epileptic encephalopathies. It is also preparing a single pivotal trial for Fragile X syndrome, an inherited syndrome that may result in mental handicap.
Last month, it announced it remained on track to launch the Fragile X syndrome trial in the middle of this year to support a new drug application filing with the FDA.
The company reported it holds $52.1 million in cash as of March 31. It's enough to fund operations and capital requirements into 2019, the company said last month.At last check, Zynerba's market cap stood at $148 million.