Individual investors are obsessed with marijuana stocks these days, hoping to get in on pot stocks the same way Joe Kennedy got in on whiskey in the days before prohibition was lifted… so it certainly caught our readers eyes when Hilary Kramer started promoting that she has “The One Stock That Could Make
You a Marijuana Millionaire.”
So what is it?
Here’s a taste of the ad to get you started:
“If you don’t take a small position in this marijuana stock, you’ll regret it for the rest of your life.
“Over the past five years, this company’s stock has risen 1,303% and is set to repeat these great gains over the next five.”
And then she jumps right into a few specific clues for us:
“… this $3 billion Mari-Pharma company:
1. Developed the world’s first prescription marijuana medicine that’s now approved for treatment in 29 countries outside the United States.
2. Possesses a pipeline of eight additional clinical-stage cannabinoid product candidates, many of which have been granted Orphan Drug Designation status by the FDA.
3. Locked up the patent rights to a number of cannabis-derived medicines under development, including treatments for Alzheimer’s disease, breast cancer, colon cancer, diabetes, multiple sclerosis, Parkinson’s disease, prostate cancer, and schizophrenia and…
4. May be months away from bringing the USA’s first FDA-approved cannabis-formulated treatment for epilepsy to the market.”
And, as ever, the comparison to some other high-flying company that you regret not owning…
“… using its vast patent rights to shape the future of medical cannabis no differently than Tesla has shaped the future for electric cars.”Are you getting our free Daily Update
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And we throw on top of that the “perfect timing” claimed by Kramer — she says…
“You couldn’t ask for a better time to add this company to your holdings, as it may be just months away from receiving FDA approval for its breakthrough cannabis-formulated epilepsy drug.
“When I say breakthrough, I mean it.
“Clinical testing found that this new epilepsy drug reduces seizures by 54% and without the side effects of fatigue and nausea that are associated with current medical treatments.
“This is why one well-respected industry analyst projects that this company’s cannabis-formulated drug could generate peak annual sales of around $3 billion.
“At that rate, the stock could see its earnings jump a whopping 2,900% in the first year alone, turning the company from a $3 billion operation to one with a market cap of $30 billion.”
And the publisher includes a little side note just to further intrigue:
“As you’ll read here in this special BUY ALERT, this $3 billion Mari-Pharma company is not only months away from receiving the world’s first FDA-approved marijuana medicine but also has over 60 patents that could give it a monopoly-like position for virtually every cannabis-based medicine for treating or curing everything from Alzheimer’s, Parkinson’s, and multiple sclerosis to numerous forms of cancer.”
So what’s the stock? This is, as you may quite easily have guessed, GW Pharmaceuticals (GWPH), which has been covered a great many times in this space… and is one of those marijuana stocks that’s not really a marijuana stock — it’s a drug developer that is using marijuana compounds as their raw material.
In general, that should make it more appealing and predictable than “recreational” pot stocks, or stocks tied to the boom in mom-and-pop pot operations and small farming facilities and the like — if they’re creating drugs, they’ll have a more obvious commercialization pathway, and patents that are meaningful, and, since they’re not selling bags of marijuana from storefronts, no real regulatory concerns beyond what all pharma companies face. (If there’s a regulatory hurdle for GW Pharma it’s not marijuana’s legal status, they’re not selling marijuana — it’s the fact that marijuana is still a Schedule 1 drug according to the feds, which means they have more red tape to cut through in order to work with it as they grow their raw materials and develop their drugs).
But I’ve written many times about GW Pharma and I don’t know that I’ve ever said anything very helpful to investors — it’s the big player in marijuana-derived medicines, so newsletters tend to lean on it as the “safer” play on legalized pot. They have patented strains and may have future brand name potential, I suppose, but, more importantly, they’re not in the “marijuana as a commodity” business — assuming their clinical trials are successful and their drugs approved, they will have a patented product that has strong pricing and real demand to go with the monopoly position they’ll enjoy as the supplier.
Legalization is perhaps a risk in some ways, not a benefit, because if similar benefits can be obtained from smoking marijuana or chewing on some brownies then maybe the patients who need relief from cancer pain or epilepsy will go with the raw material instead of the engineered drug… but that’s true of lots of herbal remedies and other active ingredients that are available in less controlled variations as herbal or alternative treatments, and it’s probably not a real concern for GWPH — I bring it up just because I think the wave of marijuana legalization legislation is irrelevant to GWPH, despite the fact that it’s often touted as “buy” because of those state law changes.
As a real pharmaceutical company, well, you can make your own call — yes, their lead drug, Epidiolex, is on track to be submitted to the FDA for marketing approval this year, and, given their close relationship with the FDA throughout the process, will probably be approved. I don’t know what the market will be, I guess that depends on whether doctors jump on the approval and start to try it on more of their epilepsy patients or whether they use it strictly for the narrower indications it will be approved for initially.
And yes, Goldman Sachs did reportedly initiate coverage of the stock last Fall, with a price target of $189. The average price target is about $155, and the estimates for next year’s sales (which would be the first year of Epidiolex sales, assuming it’s approved) vary widely ($45 million to $265 million), probably largely because of different estimates about how quickly the drug could be approved, brought to market, and pushed by the sales force. And you can see the company’s own plans in their most recent investor presentation here.
So… over to you, dear friends: Want a toke of GWPH as they come close to commercialization? Think it’s already rich enough? Let us know with a comment below.