One of the hottest areas in the investment world today is legal cannabis. Although marijuana and related products are not fully legal across the United States, the move by individual states to legalize cannabis for medical or, in some cases, recreational use has opened up many avenues for potential investment opportunities. As the cannabis industry changes in order to fall in line with regulatory requirements, the field of companies hoping to become established early on in the process is huge. At the same time, there is tremendous interest among investors hoping to cash in on what they believe to be an up-and-coming sector of the market thanks to the growth prospects of the industry.
One company, in particular, has drawn attention from many investors. GW Pharmaceuticals PLC ADR (GWPH) is a biopharmaceutical company headquartered in the U.K. GW aims to develop products within the medical cannabis portion of the legal marijuana industry. Below, we'll explore what this company does and how it has already made a name for itself.
Medical Marijuana Products at the Forefront
As of this writing, 19 states allow marijuana to be purchased for medicinal purposes, while just 7 states have legalized some quantity of marijuana for recreational purposes. States tend to focus on medical cannabis products before they legalize recreational usage, so companies like GW Pharmaceuticals have been incentivized to focus on developing these offerings first and foremost.
GW Pharmaceuticals is focused on discovering, developing and marketing therapeutics based on proprietary cannabinoid compounds. The company has seen early success with Epidiolex, an oral medical product which aims to treat patients with Dravet syndrome or Lennox-Gastaut syndrome. Significantly, the Food and Drug Administration (FDA) has signaled its approval of Epidiolex. Now, GW Pharmaceuticals is continuing to explore related treatment options; according to a report by Stock Investor, the company has submitted an application in Europe for additional therapeutic products related to these syndromes and other rare epilepsy conditions.
Another key offering that GW has developed is Sativex(R), the first plant-derived cannabinoid prescription drug. Currently slated for a phase 3 trial in the U.S., Sativex(R) has the potential to corner a significant portion of the medical marijuana industry if it meets final approval. GW also has an impressive pipeline of additional products related to the treatment of autism spectrum disorder, schizophrenia, glioblastoma and more.
Wall Street Takes Interest
GW Pharmaceutical's success has already drawn the attention of Wall Street firms. In late September 2018, Morgan Stanley raised its target price for the stock to $240. As of this writing, the stock trades for just over $143 per share. GW's revenues for 2018 are forecasted at $17 million, but revenue for 2019 is expected to increase by a margin of more than 700%, yielding revenues upwards of $146 million.
As of now, shares of GWPH have been fairly volatile, but after testing technical support over the summer GWPH has hit new highs as recently as September. As of this point, the legal cannabis space is highly unsettled, with a large number of companies vying for attention and dominance. If GW is able to bring key products to market before its competitors, it could establish itself as a major force within the growing sector. Nonetheless, cannabis is unproven as a sector, and investors are best advised to be cautious when exploring this area. In order for investors to be able to make profits in this space, they will need to not only pick the correct companies to invest in but also be careful in how they time their buys and sells. If GWPH is poised to break out, it may be best to buy it sooner rather than later.