Health

Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Giving marijuana to kids is usually a criminal offense, rather than grounds for a 100 percent-plus stock price increase.

GW Pharma is the exception. On Monday, the company reported its cannabis-derived drug Epidiolex in a late-stage trial substantially reduced the number of seizures in patients with a difficult-to-treat form of pediatric epilepsy called Dravet syndrome. 

GW shares jumped 120 percent on the news. The company is now one of just 10 in the Nasdaq Biotech Index to deliver positive share price growth this year, and the index's second-best performer this year. Before Monday, GW was down more than 40 percent for the year.

Success with Epidiolex would not only be good news for patients and GW, helping it erase the bad taste of some past trial failures. It would also be evidence that such drugs can be effective beyond typical medical marijuana treatments.

Getting Higher
Positive late stage data on its cannabis derived seizure drug has GW's shares soaring
Source: Bloomberg

The loud and frequently politicized debate about medical marijuana is well-known. Less so are pharma's efforts to find narrowly targeted marijuana-based treatments. 

Companies have suggested cannabis derivatives could treat everything from diabetes to schizophrenia, but progress has been slow. GW, which has been around since 1998, already has a drug called Sativex approved outside of the U.S. to treat a different disorder. Its partners in developing and selling that drug include pharma giants such as Bayer and Otsuka. 

But getting that drug to market in the U.K. was a years-long saga, and crucial FDA approval has long eluded it -- as have significant sales. R&D fees from partners have substantially outstripped sales, in fact: 

Lethargic
Sales of GW Pharma's first approved medicine have been less than stunning.
Source: Bloomberg

A U.S.-approved seizure drug would be a far bigger deal than Sativex. Epidiolex, which GW wholly owns, is made of plant-derived liquid cannabidiol, or CBD, the other major cannabinoid present in marijuana. CBD isn't psychoactive and includes no THC.

GW is testing the drug in a second rare seizure disorder, with results expected later this year. Depending on how that trial and a second study in Dravet go, it will decide when and how broadly to file for FDA approval. If approved for use in either of those rare disorders, then the drug will win "orphan" drug status from the FDA, giving it extra years of market exclusivity. The drug would also likely command a premium price.  

The company hopes to bring Epidiolex to market in the U.S. without adding a partner, according to a Bloomberg interview of CEO Justin Gover. That would be a significant and expensive undertaking, but one that would let GW hang on to more profit.

The results announced Monday are promising: The drug reduced seizures by 39 percent, compared to 13 percent for those on the placebo. But approval is not a sure bet; there are some potentially worrying side effects, including sleepiness, decreased appetite, and vomiting. GW said their other data bolstered the case for the drug's efficacy, but declined to share it or other safety data in its press release or investor call. People watching the company still want that data, and the FDA certainly will.  

It's hard not to see today's jump as a bit over-exuberant. Other companies working on similar drugs, including Insys, Zynerba, and Zogenix, all saw their share price jump significantly on Monday despite being behind GW. There's still a lot of data to come, and no easy path to approval.

But there is now more reason to hope cannabis-derived drugs can be more than just the profound (in the moment) musing of basement-couch sages.  

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Max Nisen in New York at mnisen@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net