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GW Pharmaceuticals shares are up 370pc in a year

The innovative cannibas based drug maker could rise further if more approvals come through, says Questor

GW Pharmaceuticals grows cannabis in a top secret location in the South of England Credit: Photo: GW Pharmaceuticals

GW Pharmaceuticals
378¾p-13¾p
Questor says HOLD

IT HAS been a long wait for GW Pharmaceuticals [LON:GWP] investors, but the company is finally repaying their faith in the cannabis drug maker.

Shares in GW have jumped following regulatory approval for a new medicine, and there could be more to come.

The British company last year achieved European approval for Sativex, a drug that combats the effects of multiple sclerosis. The group said yesterday that annual sales of Sativex have doubled to £4.4m, from £2.2m last year.

The strong performance from Sativex helped total revenue rise to £30m for the year ended September 30, up from £27.3m last year.

Approval for Sativax has seen GW shares soar during the past 12 months, up from about 80p in September last year to 378¾p yesterday.

The group makes most of its money from fees charged to Japanese drug maker Otsuka, which has secured the exclusive rights to develop and market Sativex in the US.

GW said Otsuka paid it £24.3m in the year to September 30 for its work in getting Sativex, which is currently unavailable in the US, approved for use in dealing with cancer-related pain.

The company has plenty of promise but it is still extremely risky. It may have been founded in 1998 but it is still very young for a pharmaceutical group.

GW reported that its full-year loss before tax had widened to £19.6m, compared with £10.4m a year earlier. The losses were largely due to increased spending in new drug research to £12.3m, up from the £9.2m spent last year.

GW has big hopes for Epidiolex, which helps treat childhood epilepsy and could also benefit those suffering from autism. Sativex testing has also been expanded to patients suffering from pain related to cancer treatment.

Following Sativex’s approval, investors have been willing to back GW to see if it can develop its cannabis drugs into further markets. The company completed two successful offerings on America’s Nasdaq market, which raised $220m (£126.3m).

GW said at the end of the year it still had cash of £164.5m on its balance sheet, up from £38.1m last year.

For investors GW remains a long shot. Analysts expect the company to carry on making losses for the next two years.

That said, the company is making progress with its drug approvals and if more drugs follow it will become a target for larger pharma giants.

One to watch for now. Hold.