We expect GW Pharmaceuticals plc GWPH to surpass expectations when it reports second-quarter 2019 results on Aug 6, 2019, after the market closes.

Shares of GW Pharmaceuticals have soared 70.4% so far this year, outperforming the industry’s increase of 16.6%.

The company’s surprise record has been mixed so far, having delivered a positive earnings surprise in three of the last four quarters while missing estimates once, the average four-quarter beat being 22.34%. In the last reported quarter, GW Pharmaceuticals came up with a positive surprise of 32.26%.

Let’s see how things are shaping up for this quarter to be reported.

Factors to Consider

GW Pharmaceuticals derives revenues from the sale of its commercial drug Sativex and anti-epileptic drug Epidiolex.

Sativex is marketed outside the United States for treating spasticity due to multiple sclerosis (MS). The drug has been performing well in the exU.S. markets with sales picking up on a year-over-year basis, a trend we expect to continue in future quarters.

Notably, in December 2018, GW Pharmaceuticals met with the FDA for the regulatory pathway of Sativex in the United States. The company now plans to begin a pivotal phase III study on Sativex for treating spasticity due to MS in the fourth quarter of 2019.

Epidiolex generated sales of $33.5 million in the first quarter of 2019. It became the first cannabis-derived drug to gain an approval from the FDA last June for the treatment Lennox-Gastaut syndrome (LGS) and Dravet syndrome in patients aged two years or older. This nod makes it the first plant-derived cannabinoid prescription medicine.

Epidiolex saw a strong uptake in sales and new patient enrollments following its launch last November. We expect this trend to continue in the to-be-reported quarter.

Earlier this month, the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) rendered a positive opinion on Epidiolex, recommending its marketing authorization for the given indication. A decision is expected within the next two months.

In May, GW Pharmaceuticals announced positive results from the phase III study evaluating Epidiolex for treating seizures associated with tuberous sclerosis complex (TSC). A supplemental new drug application for the same is expected to be filed during the fourth quarter of 2019 with a goal of label expansion set in 2020.

Notably, the company is already working toward Epidiolex’s label expansion for indications beyond epilepsy to autism. An update on the same is awaited at the upcoming earnings call.