GW Pharma (GWPH) Posts Narrower-than-Expected Q4 Loss

GW Pharmaceuticals plc GWPH reported fourth-quarter fiscal 2016 (ended Sep 30, 2016) loss of 89 cents per share, much narrower than the Zacks Consensus Estimate of a loss of $1.48. However, the reported loss was wider than the year-ago figure of 85 cents.

The company’s shares gained 4.6% following the release of fourth-quarter fiscal 2016 results. In fact, its year-to-date share price movement shows that GW Pharma has outperformed the Zacks classified Medical Products industry. Specifically, the stock gained 69.2% year to date, compared to the industry’s drop of 1.6%.

However, total revenue in the fourth quarter of fiscal 2016 came in at $2.2 million, compared with $8.5 million in the year-ago period. Revenues were also below the Zacks Consensus Estimate of $2.9 million.

Research & development (R&D) expenses declined 18.5% year over year to $31.4 million. However, selling, general and administrative (SG&A) expenses were up 27.8% to $9.6 million due to pre-launch commercialization activities related to Epidiolex.

Fiscal 2016 Results

For fiscal 2016, GW Pharma reported a loss of $3.65 per share, narrower than the Zacks Consensus Estimate of $4.48. Again, the reported loss was wider than the year-ago figure of $3.29.

Similarly, fiscal 2016 revenues came in at $13.3 million, compared with $43.2 million in the year-ago quarter. Revenues too fell short of the Zacks Consensus Estimate of $13.6 million.

Focus on Epidiolex

GW Pharma has made significant progress with its lead cannabinoid pipeline candidate, Epidiolex. During the quarter ended Sep 2016, the company announced positive data from the second pivotal phase III study on Epidiolex for the treatment of seizures associated with Lennox-Gastaut syndrome (LGS).

In Jun 2016, the company reported data from the first pivotal phase III study on Epidiolex for LGS. Earlier this year, GW Pharma also revealed positive top-line data from the first pivotal phase III study on the candidate for the treatment of seizures associated with Dravet syndrome. The company is currently enrolling patients in the second phase III study for Dravet syndrome. Data from the study is anticipated in 2017.

In the following month, the company held a successful pre-new drug application (NDA) meeting with the FDA to discuss pre-clinical and clinical aspects of the proposed regulatory application for Epidiolex. In Nov 2016, the company also held a chemistry, manufacturing and controls (CMC) pre-NDA meeting. At this meeting, agreement was reached on key questions related to the CMC content of the NDA submission.

GW Pharma expects to file for an FDA approval of Epidiolex for both Dravet syndrome and LGS around the end of the first half of 2017. Assuming all goes well on the regulatory front, the company anticipates simultaneous approval in the two indications.

Moreover, GW Pharma expects to submit a regulatory application for Epidiolex in the EU in the second half of 2017. It has already started pre-launch commercialization activities for Epidiolex in the U.S. and the EU.

In a separate press release, GW Pharma announced the presentation of additional data from phase III studies on Epidiolex at the annual meeting of the American Epilepsy Society. Results included key secondary efficacy endpoints data from the pivotal phase III study on Epidiolex in Dravet syndrome and the first pivotal phase III study on Epidiolex in LGS.

Meanwhile, the company is evaluating Epidiolex for additional indications. A phase III study on Epidiolex for the treatment of tuberous sclerosis complex is currently underway. Data from the study are expected in the first half of 2018. Moreover, a two-part phase III study in patients with infantile spasms was initiated in the fourth quarter of 2016.

While the company expects R&D spend to be relatively unchanged in fiscal 2017, SG&A spend is expected to increase by about 30%, mainly in the second half, post the NDA filing.

Apart from Epidiolex, GW Pharma has a deep pipeline of other cannabinoid candidates with special focus on orphan pediatric neurologic conditions.

GW PHARMA-ADR Price, Consensus and EPS Surprise

GW PHARMA-ADR Price, Consensus and EPS Surprise | GW PHARMA-ADR Quote

Zacks Rank & Key Picks

GW Pharma currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Sucampo Pharmaceuticals, Inc. SCMP, Vanda Pharmaceuticals, Inc. VNDA and Anika Therapeutics Inc. ANIK. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sucampo’s earnings estimates increased from $1.03 to $1.22 for 2016 and from $1.30 to $1.58 for 2017 over the last 60 days. The company posted a positive surprise in all of the four trailing quarters with an average beat of 35.55%.

Vanda’s loss estimates narrowed from 62 cents to 52 cents for 2016, while its earnings estimates increased from 13 cents to 22 cents for 2017 over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 56.65%. Its share price has surged almost 68% year to date.

Anika’s earnings estimates increased from $1.96 to $2.06 for 2016 and from $2.03 to $2.09 for 2017 over the last 60 days. The company posted a positive surprise in all of the four trailing quarters with an average beat of 33.14%. Its share price has gained approximately 24% year to date.

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