GWPH Business Plan: Alan Brochstein’s Thoughts
Alan Brochstein has followed quite closely recent developments in the medical and financial worlds insofar as they have affected GW Pharmaceuticals (NASDAQ: GWPH), the developer of two promising cannabis-based medications.
Brochstein, an early rider on the cannabis-investment bandwagon, advises several hedge funds and investment managers. Recently he shared his perspective in an interview with MJINews. To put it concisely, he believes the GWPH business plan has two parts: first woo the Food and Drug Administration, then attract the attentions of a large biopharm buyer looking to widen its product portfolio.
Data and Implications
On Monday, April 13, 2015, the American Academy of Neurology released Epidiolex data in connection with the treatment of resistant pediatric rare epilepsies, in advance of a fuller presentation on Wednesday, April 22.
The market reaction to that data raises the question: how much of a stock price increase was that good news worth? And, in the weeks since, could the stock of the company that developed Epidiolex, GW Pharmaceuticals (NASDAQ: GWPH), have become ripe for correction?
Through early April, this stock’s price was in the neighborhood of $91. With the AAN release it rose sharply to above $108. It hit $114 even at the close of business April 17, then fell back a bit.
After the end of trading Wednesday, April 22, the more complete data did make its appearance, and again it favorably impressed the markets. The data on 137 patients, a number increased over those of previous disclosures, indicated that there was a median 54 percent reduction in seizures after 12 weeks of treatment and a maintenance of that clinical effect over at least 24 weeks. Further, Epidiolex was “well tolerated,” i.e. no devastating side-effects would derail hopes for this drug as a marketable breakthrough.
GWPH’s price closed at $113.04 on Wednesday, but it rose to $120.77 over the course of Thursday’s trading.
The Real Nub of the Story
GWPH, founded in 1998, went public in 2001. It is headquartered in Britain though its hopes reside in the United States. As Brochstein said, “The real nub of this story is their ability to sell [their products] in the United States.”
Yes, Brochstein said, GWPH is fully dependent on its cannabis-related products. Beyond Epidiolex, this includes Sativex, a mouth spray used in the treatment of multiple sclerosis. But “the pipeline is not restricted to just the two” now known.
Also, the uses of Epidiolex may go well beyond epilepsy.
Eyes are on the U.S. because the U.S. is the world’s key drug market. In part this is because the U.S. is a wealthy country, a lot of people and institutions have money to spend. In part, though, it is because the U.S. doesn’t have a single-payer system, it has a lot of private parties, doctors, institutions, insurers, to whom an entrant can market. Finally, the U.S. is the big dog because as Brochstein said, “in much of the rest of the world the FDA’s approval of a drug is very meaningful.”
And the FDA is critical to the business plan. GWPH doesn’t want to be just another entry in the tournament for selling “free market cannabis” on a state-by-state basis, Brochstein said. It wants to get FDA approval and sell the product in the U.S. with the federal government’s seal, and then in the rest of the world with its added cachet.
A question often asked of the growth of a state-by-state legal marijuana market in the U.S., and of the investment prospects it generates, is this: “Couldn’t it all turn into a trap quickly if a Republican drug warrior president comes into office in January 2017?” Indeed, on one view such investments could become a trap months earlier than that, if public opinion turns in favor of such a candidate in, say, September 2016, and the markets start discounting asset values in accord with that turn.
Asked about such a scenario, Brochstein denied that it ought to concern actual or potential investors in GWPH. That scenario would devastate what he calls the free-market cannabis world, but not the prospect of making use of FDA-approved cannabis. And in fact it would assist the sale of the hypothetical FDA-approved cannabis by “stifling the competitors.”
Biopharm Consolidation
No corner of the biopharm market exists in isolation—the market is in an era of biopharm consolidation. The recent history of one Israel-based company makes this point vivid. Teva bought NuPathe in 2014 after a bidding war with Endo. Why? Because NuPathe had developed a lucrative specialty as the maker of Zecuity, the only FDA-approved prescription patch for treating migraine headaches. Teva, a generalist company, wanted to strengthen its portfolio in regards to the central nervous system.
Earlier this year, Teva acquired Auspex Pharmaceuticals for $3.5 billion. Auspex was that valuable because of SD-809, a drug it had developed for the treatment of Huntington’s disease, a neurodegenerative disorder. Again, the specialist firm was a lucrative prize for the generalists.
Now, as the process of consolidation continues, Teva recently attempted, and failed, to takeover U.S.-based Mylan, which itself recently sought, and failed, to acquire the Ireland-based drug company Perrigo.
Why did Teva want Mylan? It was not a case of a generalist pursuing a specialist. It was simply two generics-heavy generalists whose product portfolios could have complemented one another.
Still, amidst all that, it is unsurprising that in Brochstein’s view, GWPH could come in for a piece of the action generated by all this consolidation.
Brochstein discussed as a reasonable speculation (though he wanted it to be clear he is not predicting) that when GWPH is eventually acquired by a large company to whose portfolio it will make a valuable addition, it could fetch $4 billion.
If true, that would correspond to a stock price of $200, which in turn would indicate that there may remain a lot of room on the upside.
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
About MJINews
MJINews.com is owned by Panther Media, which was founded in March of 2014 by veteran publishing and investment executives David Friedman and Kristin Fox. MJINews was designed to fill the need for a reliable and credible source of information for investment opportunities in the nascent legal marijuana industry. MJINews is dedicated to helping entrepreneurs and investors make informed business and investment decisions. You can follow MJINews on Twitter @mmjinvestor.
Search CannabisFN
Press Coverage
Psychedelics Index
Top Videos
Tom Zuber is Zuber Lawler & Del Duca’s Managing Partner. He has a degree with highest honors in biomedical engineering and has advised some of the most iconic companies in the world on their patent and trademark portfolios. He is at the cutting edge of cannabis patent and trademark law. He holds degrees from Harvard University and Columbia Law […]
The producers of O’ Cannabiz have decades of experience producing national-profile events and creating global connections between business communities in the arts, broadcasting, media and technology. They have organized trade summit initiatives with governments around the world. And they have worked closely with sponsors in all levels of Canadian government.
Geyser Brands Inc builds health-based hemp CBD consumer products in the Nutraceutical, Cosmetics, Food & Beverage and Pet sectors world-wide.
Network Partners
About CFN Media Group
CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.
Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.
Copyright © Accelerize Inc. · All Rights Reserved · Privacy Policy · Legal Disclaimer
