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GW Pharmaceuticals- Healthcare and Cannabis

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It’s no secret that marijuana and Cannabidiol (CBD) stocks have been on fire. But you don’t have to go with the flock of growers, packaging companies and hemp derivative companies to play the trend, observes growth stock expert Mike Cintolo, editor of Cabot Top Ten Trader.

GW Pharmaceuticals (GEPH) has been researching cannabinoids for two decades and is one of the global  leaders of plant-derived CBD therapeutics.

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The stock is doing well because GW recently launched its flagship product, Epidiolex, into the U.S. market and it’s off to a great start. Revenue in Q1 (reported in early May) was twice as good as expected with Epidiolex bringing in $33.5 million in sales. The treatment is for a couple of congenital seizure conditions known as Dravet and Lennox-Gastaut syndrome.

With a pending label expansion for Tuberous Sclerosis (pivotal Phase 3 data was good) and several off-label uses for the general epilepsy patient population, plus an annual sticker price of around $30,000 per patient, the market potential for Epidiolex is now looking far bigger than initially anticipated.

The drug is early in its launch and there are more potential treatments in the pipeline (one of them, dubbed, nabiximols, is a treatment for MS and enters Phase 3 later this year), so if all goes well growth should remain solid for years to come.

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Current consensus is for revenues to hit $169 million this year, then grow 182% to $476 million in 2020. It’s looking like a monster story.

GWPH has had its ups and downs over the years, including last year’s rush to $180 in September and 50% decline to $90 in December.

But the stock spiked back to the $180 range in February (up nine weeks in a row), built a solid nine-week base after that and has been toying with a breakout in recent weeks. We like the resilience and the volume clues — we’re OK picking up some shares around here.

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