Marijuana Stock GW Pharmaceuticals Could Fall And There Are 3 Reasons Why, According To NASDAQ

That’s not to say that GW Pharma won’t be the exception, but it does cast some doubt on whether the valuation being given to the company’s shares is justified. After all, GW Pharma’s current market cap of $1 billion is about 20 times its annualized trailing-quarter sales. For comparison, when Amgen paid 17 times sales to buy highly coveted Onyx Pharmaceuticals and get its hands on Onyx’s promising cancer pipeline. Similarly, deals to acquire ViroPharma and Forest Laboratories have valued those companies at less than 10 and seven times sales, respectively.

Even if we assume that new approvals will move the sales needle for cannibinoid-based drugs like GW Pharma’s Sativex, which is currently approved to treat multiple sclerosis spasticity in Europe, sales would need to at least double to bring the company’s valuation more in check.

2. Crossing the moat in cancer pain Much of the interest in GW Pharma stems from its potential to win FDA approval of Sativex as a treatment for breakthrough pain in cancer patients. Sativex has shown solid efficacy during cancer patient trials, and an FDA decision could come within the year. Although spending on breakthrough pain totals in the billions annually, investors may want to temper predictions.

To read more, visit http://www.nasdaq.com/article/3-reasons-why-marijuana-stock-gw-pharmaceuticals-could-fall-cm382776

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