GWPH stock is trading lower on Wednesday despite GW Pharmaceuticals (NASDAQ:GWPH) reporting better-than-estimated earnings for the fourth quarter.
GW Pharmaceuticals has been one of the most notable successes in the medical marijuana industry, and its financial results for the fourth quarter reinforced that reputation. The company not only beat analysts’ estimates, but more importantly, its marijuana-based epilepsy medicine Epidiolex continued to grow in terms of sales.
Epidiolex's Revenue Jumps
In the fourth quarter, GW Pharma generated losses of $24.9 million or 7 cents per share. In the prior-year period, it had made losses of $71.9 million, which worked out to 20 cents a share. This quarter, revenue soared to $109.1 million from only $6.6 million in the prior-year period. In the third quarter, revenue had stood at $93 million.
Analysts had estimated losses per share to come in at 4 cents, and while GW Pharmaceuticals did manage to beat revenue estimates of $105.1 million, this achievement did not seem to lift GWPH stock.
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In fact, GWPH stock dropped by as much as 5.70% to $110.40 on Tuesday.
The company announced that Epidiolex sales soared to $104.5 million in the quarter. Epidiolex is a CBD-based product that is meant to treat a certain form of epilepsy and is approved by the United States Food and Drug Administration.
While it is clear that the company’s fortunes are almost completely linked to Epidiolex sales, GW Pharmaceuticals Chief Executive Officer Justin Grover said that this year, the company is aiming to develop new products. At this point in time, GW boasts of the only medical marijuana product that has been approved by the FDA, which has given it a competitive advantage in the markets.
However, the company still cannot be compared to some of the bigger pharmaceutical companies in the world. It still has cash flow losses when compared to big-ticket pharma companies. That being said, experts believe that GWPH stock has a fair price when considering the price to cash flow ratio.
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