Goldman Sachs Sees 42% Upside in GW Pharma (GWPH) and Initiates Coverage at 'Buy'
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(Updated - October 7, 2016 8:43 AM EDT)
Goldman Sachs initiated coverage on GW Pharma (NASDAQ: GWPH) with a Buy rating and a price target of $189, implying upside of 42%. Analyst Salveen Richter sees potential for $1.6 billion in worldwide sales for lead asset Epidiolex. In an M&A scenario the stock could be worth $349, the firm said.
"GWPH’s lead asset is Epidiolex for Dravet Syndrome (DS) and Lennox-Gastaut Syndrome (LGS), two severe orphan epilepsies, which are de-risked post three positive Ph 3 studies. We anticipate a solid launch trajectory (>1K US patient bolus) with widespread off-label use in nonDS/LGS epilepsies – we model $1.6bn in WW sales, of which 51% is derived from US pediatric off-label use (assumes sales cliff in 2026 and 2028). A barrage of pipeline catalysts should drive shares higher in 4Q16," said Richter.
Discussing catalyst, the analyst said, "We expect GWPH shares to trade higher on the following pipeline catalysts: (1) publication of Epidiolex Ph 3 study in Dravet syndrome in a top-tier medical journal in 4Q, (2) American Epilepsy Society (Dec 2-6) meeting data to reinforce the clinical and safety profile, (3) Epidiolex Ph 3 study initiation in infantile spasms in 4Q, (4) Sativex Ph 2 data in cerebral palsy spasticity and THC:CBD Ph 2a data in recurrent glioblastoma in 4Q, (5) Epidiolex NDA submission in 1H17, (6) CBDV Ph 2 data in adult focal seizures/epilepsy in 1Q17, (7) AAN (Apr 22-28) data update, (8) initiation of CBDV Ph 2 study in autism spectrum disorders in 1H17, (9) Epidiolex Phase 3 dose-ranging Dravet study data in 2017, and (10) Epidiolex Phase 3 data in tuberous sclerosis complex in 2H17. We believe GWPH will submit the Epidiolex in DS/LGS US regulatory filing in 1H17 (we assume US/EU launches in 2Q18/ 3Q18; however, 2H17 is possible). Per KOL feedback, there is substantial interest from the medical community and patients for Epidiolex in all treatment-resistant epilepsies (TREs) in pediatric and adult populations."
Shares of GW Pharma closed at $133.10 yesterday.
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