Cannabis stocks tumble as GW Pharma rallies after strong Epidiolex launch

on Feb28
by | Comments Off on Cannabis stocks tumble as GW Pharma rallies after strong Epidiolex launch |

GW Pharmaceuticals PLC shares were a standout among cannabis stocks Wednesday, after the company reported a strong start for Epidiolex, the first cannabis-based drug to win regulatory approval as a treatment for a severe form of childhood epilepsy.

GW Pharma shares

GWPH, +13.80%

were up 14% in early trade, putting them on track for a five-month high, as analysts welcomed fiscal first-quarter results that showed Epidolex chalked up $4.7 million in revenue since its November launch.

JPMorgan analyst Cory Kasimov reiterated his overweight rating while boosting his stock price target to $180, which is about 3% above its current level, from $134.

“It’s hard to see how the Epidiolex launch could have gotten off to a better start,” Kasimov wrote in a note to clients. “In our view, commercial metrics to date suggest that Epidiolex should continue to impress.”

Stifel Nicolaus’s Paul Matteis raised his price target to $191 from $179 and reiterated his buy rating, saying that while the launch of Epidiolex has been impressive, “progress on reimbursement is especially encouraging, as are GW’s efforts to render the prescribing process easier (and drug shipment more rapid) for physicians.”

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Evercore ISI analyst Josh Schimmer raised his price target to $194 from $170.

“Still early days in the launch, and still much to learn about the long-term trajectory and move from the initial bolus to long term market dynamic,” he wrote in a note. “However, we think early signals are very strong and should propel growth.”

See also: Aurora Cannabis shares climb on news of medical marijuana deal in Portugal

Elsewhere, Mackie Research noted that all of the current 2020 presidential candidates support cannabis legalization, including the Republican candidate, former Massachusetts Gov. Bill Weld. That marks a stark change in view from the past but aligns with public opinion, which has shifted rapidly in recent years.

In case you missed it: Tilray makes richest deal yet in effort to jump into U.S. CBD market

Also: Canopy Growth shows surging pot sales in late-arriving earnings report

About 62% of Americans now favor legalization, almost double the 35% who were supportive in 2008, according to the Pew Research Center. Candidates are also eyeing the tax revenue they can expect from the legal sale of cannabis, along with job creation and growing support for ending the era of mass incarceration.

See: These three marijuana stocks are rising in popularity

Valens GroWorks Corp. shares

VGWCF, -2.18%

rose 6%, after the company said it has entered into a long-term extraction services agreement with Tilray Inc.

TLRY, +0.63%

Valens will extract at least 15,000 kg a year of dried cannabis and hemp. Terms were not disclosed. Tilray shares were up 1.4%.

Organigram Holdings Inc. shares

OGRMF, -1.34%

OGI, -2.23%

were down 2%, after the company said it has exercised its right to convert $98 million of its 6.0% convertible bonds due Jan. 31, 2020 into common shares on April 1. The bonds will be converted into about 18 million shares. Organigram expects to save about $4.9 million in cash interest payments that would be payable if it held the debt to maturity.

CannTrust Holdings Inc. shares

CTST, +0.54%

TRST, -0.90%

were up 1.3%.

Other stocks were lower. Cronos Group Inc.

CRON, -1.43%

was down 3.4%, Canopy Growth Corp.

CGC, -1.10%

WEED, -1.04%

was down 1.9% and Aphria Inc.

APHA, -1.26%

APHA, -1.04%

was down 2.8%.

Aurora Cannabis Inc. shares

ACB, -2.71%

ACB, -3.14%

fell 0.8% and Hexo Corp.

HEXO, -0.71%

was down 0.7%.

The ETFMG Alternative Harvest ETF

MJ, +0.68%

was up 0.8% and the Horizons Marijuana Life Sciences ETF

HMMJ, +0.50%

was up 0.5%.

The Dow Jones Industrial Average

DJIA, -0.28%

and the S&P 500

SPX, -0.05%

were down about 0.5%.

See now: Marijuana stocks to watch: CannTrust makes its case as a major pot operator

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