GWPH GW Pharmaceuticals PLC

EDISON EQUITY RESEARCH: GW PHARMACEUTICALS: ADR OUTLOOK - 2016: A TRANSFORMATIVE YEAR

With four Phase III trials of Epidiolex (cannabidiol, or CBD) in various forms of pediatric epilepsy, two for Dravet syndrome and two for Lennox-Gastaut syndrome (LGS) expected to provide top-line readouts in 2016 (three in H116), investors are understandably laser focused on these programs. Based on an analysis of the previous results of other molecules in Dravet and LGS, as well as data from the expanded access program, we are confident the trials are sufficiently powered to demonstrate a statistically significant benefit for patients taking Epidiolex.

Our valuation is now $2.04bn or $93.64/share (vs $1.83bn, $92.41/share) after increasing the probability of success for Epidiolex in Dravet and LGS to 70% from 50%, for schizophrenia to 25% from 20% and adding TSC and IV GWP42003 for NHIE to our model. This was mitigated by the removal of estimates for Sativex for cancer pain and GWP42003 for ulcerative colitis due to the failure of the programs.

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