By Sunday night, the U.S. Drug Enforcement Administration is expected to reclassify GW Pharmaceuticals PLC- ADR (NASDAQ: GWPH)’s Epidiolex to allow medicinal use. This could open the therapy to a new and promising market.

The Analyst 

Morgan Stanley analyst David Lebowitz maintained an Overweight rating on GW with a $197 price target.

The Thesis

Morgan Stanley expects the DEA to drop Epidiolex from Schedule I — the same level as cocaine, heroin and other illegal substances — to Schedule IV, where Xanax, Ambien and Tramadol rank. At worst, it would fall to Schedule III alongside moderately to lowly addictive drugs like codeine and anabolic steroids, Lebowitz said. (See his track record here.)

Regardless of the assignment, the drug would mark a milestone on the U.S. pharmaceutical timeline. Epidiolex, already the first cannabinoid-based therapy to gain FDA approval, would become the first such drug to launch domestically.

The treatment would begin addressing Dravet and Lenox-Gastaut syndromes, which together account for 20,000 U.S. patients, but it could eventually see use in other seizure indications.

“We expect the drug will be a blockbuster, with off label usage driving it to $1.3 billion by [the end of 2025],” Lebowitz said. 

Epidiolex is under review by the EMA and could launch in Europe in the first quarter.

Price Action

GW was set to open 3.08 percent higher at $153.80 at the time of publication Wednesday.

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Photo courtesy of GW Pharma. 

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