GW Pharmaceuticals is riding the momentum of its Epidiolex rollout and planning new launches in 2020, but despite a strong third-quarter performance, investors ended the day unhappy.
Epidiolex, a cannabis-based drug approved to treat seizures from Lennox-Gastaut syndrome or Dravet syndrome, turned in revenues of $86.1 million in the quarter, slightly beating analyst estimates of $86 million. More than 15,000 patients have taken the drug since its U.S. launch a year ago, with 3,000 new patients starting treatment during the third quarter of 2019.
Investors weren't impressed, though. Shares traded down after Tuesday's market close and then fell Wednesday morning by 15%. The company may have failed to meet "whisper numbers," or unpublished expectations from Wall Street, Motley Fool suggests.
Investors may also have overlooked something more substantial, Evercore ISI analyst Josh Schimmer wrote Tuesday evening. Even as investors were fixed on the quarterly results, “most have missed a critical update from the company—that preclinical studies have proven superior efficacy for Epidiolex versus synthetic CBD.”
He said that’s a “critical step” for the company, and with it, the analysts don't expect a generic version of the drug “to be approved for many years (if ever).”
As GW Pharma continues its U.S. rollout, the company has started its European launches. After a European approval in September, GW has hit the market in France and Germany, and it plans to launch in the United Kingdom this quarter. It’s looking ahead to rollouts in Italy and Spain next year.
Also next year, GW could further grow from increased "off-label" payer coverage in the U.S., Schimmer wrote.
GW isn’t only focusing on Epidiolex’s initial indications. The company plans to submit an FDA application to treat tuberous sclerosis complex in 2020. It's also testing the med against Rett syndrome in a phase 3 study.