The bank anticipates an £800 million ($1.35 billion) worldwide potential for Epidolex, which it anticipates will make up 90% of peak revenue.
In February, Roberta Cilio, a pediatric and neonatal epileptologist who is leading the Epidiolex study at UCSF, told MainStreet the advent of Epidiolex on the market is important given that a high number of children do not respond to current drugs on the market; Dravet syndrome and Lennox-Gastaut syndrome are particularly resistant. Finding the right drug for children is particularly difficult, because it needs to be effective but also not impact brain developement, Cilio said.
"It's very promising, but it's the very beginning of the scientific approach," Cilio said. "I'm still optimistic, but I would like to call caution that we can't say this is the panacea."
The bread-and-butter for GWPH thus far has been Sativex, which is currently approved for multiple sclerosis spasticity in some 25 countries around the world.
"We expect most of the Sativex growth to come from the U.S. mkt over time, with Ph 3 trials in advanced cancer pain and MS spasticity providing the next steps," Morgan Stanley wrote in the report. "U.S. cancer pain anchors our peak (2024) WW sales est. of £200mn [$336.5]."
As enthusiastic as the Morgan Stanley report touts GWPH, it offers an even more robust outlook.
"The report itself included several scenarios, including a more bullish case with a price target of $245," Brochstein said.
As Morgan Stanley notes, "GW has multiple additional drugs in early stage development...that are not currently part of our valuation, but could be upside drivers over time." That X-factor could account for significant growth in the company and stock-plumping revenue generation -- hence the floating $245 stock price.
Morgan Paxhia, founding partner and chief investor of Poseidon Asset Management in San Francisco, has about 30% of his hedge fund's money invested in cannabis penny stocks. GWPH is the only medical marijuana company currently on the Nasdaq, which makes it perhaps less dicey than some of the over-the-counter names.
"We see GWPH as a company that has been a pioneer in terms of research and innovation for medical cannabis - a great company focused on cannabinoid based medicines," Paxhia said. "Overall, we view them as one of the better options currently available to investors looking for cannabis exposure. GWPH trades much more like a biotech than many of the OTC Cannabis stocks."
Of course, that's not to say investors shouldn't exercise caution.
"As a note, we caution any investor entering the Cannabis sector, as we would any nascent space," he said.
Success by Design
Beyond GWPH's pharmaceutical offerings themselves, Morgan Stanley also stresses GWPH excellent business platform.
For one, the company has a focus on cannabidiol (CBD) and cannabidivarin (CBDV) with a "library of novel, internally generated chemotypes." Uniform implementation of chemicals and elements are essential to safe, effective medical marijuana treatment, and the botanical element complete with climate-controlled, standardized indoor glasshouses cannot be underestimated when it comes to the company's success.
The consistency and predictability of doses sets GWPH above the pack and will go far in quelling physicians' anxiety over erratic potency levels. GWPH has a standardized batch consistency, Morgan Stanley notes, and develops its drugs with FDA phases and formal dosing work.
The pipeline potential for the company -- with a roster of innovative treatments and cannabis expertise -- bodes well for market outlook. The company has a deep bench beyond Sativex and Epidiolex with drugs planned to treat ulcerative colitis, Type 2 diabetes and even schizophrenia.
--Written by Ross Kenneth Urken for MainStreet
Also See: Can Cannabis Cure Schizophrenia> GWPH Thinks So