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Jim Cramer says this pot stock is one you should own

Jim Cramer Coronavirus

Jim Cramer
Cannabis therapeutics company GW Pharmaceuticals (GW Pharmaceuticals Stock Quote, Chart, News NASDAQ:GWPH) lost almost half of its value over the past six months, but the stock has been unfairly lumped into the broader cannabis selloff, an unfair predicament, according to Jim Cramer, who thinks GW Pharma is a long-term hold.

British pharma company GW Pharmaceuticals works on developing and commercializing cannabinoid-based drugs and therapeutics, including Epidiolex, approved in mid-2018 by the US FDA, which is used to treat some seizures and Sativex, a multiple sclerosis drug. As well, GW has cannabinoid-based drugs in various clinical trials for the treatment of epilepsy, autism, glioblastoma and schizophrenia.

GW Pharma’s share price had been climbing steadily starting in early 2016, going from $40 to as high as $196 by May of last year. That’s right about when the bubble burst on the pot market and names across the sector — from licensed producers to extraction operations to American multi-state operators — began to tumble. GWPH was no exception, dropping from the mid-$180s in May to where it currently hovers around the $100 per share mark.

Much of the downturn has been attributed to the market’s waking up to the fact that the eventual industry in Canada will likely be smaller and less lucrative than much of the hype suggested. But the trials and tribulations of Canadian LPs may have had an undue effect on companies like GW Pharma, whose fortunes aren’t tied to greenhouse cultivation numbers and pot shop sales.

“I have said that it’s a long-term hold,” said Jim Cramer on CNBC’s the Lightning Round on December 10. “I feel that cannabis and oil are two very difficult areas but I think that GW Pharma is a pharmaceutical [company] that has cannabis as opposed to a recreational play.”

GW Pharma’s latest quarterly financials came in early November where the company’s fiscal third quarter ended September 30 showed US Epidiolex sales of $86.1 million, bringing year-to-date net sales to $188.0 million.

“In this first year of launch, we are pleased to report continued Epidiolex revenue growth in the US,” said Justin Gover, GW’s CEO, in the quarterly press release. “We see significant opportunity for the short, medium and long term and believe that all the fundamentals are in place to make Epidiolex a very successful brand. We can expect to see additional momentum from Europe as well as the launch of the Tuberous Sclerosis indication during 2020.”

“On top of this, GW is ideally placed to consolidate its leadership in cannabinoid science through advancing several mid and late stage pipeline programs in the months ahead,” Gover said.

Total revenue for the quarter was $91.0 million, up from just $2.4 million a year earlier, with a net loss of $13.8 million.

Last month, GW Pharma presented data from a Phase III trial on Epidiolex for patients with tuberous sclerosis complex (TSC), finding that patients treated with Epidiolex experienced “significantly greater reduction” in TSC-association seizures compared to placebo. GW Pharma aims to expand its product label for Epidiolex in the US through a supplemental new drug application (sNDA) to the FDA, during 2020.

“We are pleased to present these results which demonstrate the potential of Epidiolex to reduce both focal and generalized seizures associated with TSC,” said Justin Gover, CEO, in a press release. “This is promising news for patients and clinicians and we remain committed to helping those suffering from seizures associated with this difficult-to-treat disease.”

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