Goldman Sachs Sees 42% Upside in GW Pharma (GWPH) and Initiates Coverage at 'Buy'

(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."

For an analyst ratings summary and ratings history on GW Pharma click here. For more ratings news on GW Pharma click here.

Shares of GW Pharma closed at $133.10 yesterday.

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