GW investors follow the script after Sativex miss

There was a time when investors would have punished GW Pharmaceuticals for Sativex’s failure to show that it could reduce cancer-related pain. But that was before the dual-listed UK group had pivoted its public face almost exclusively to the epilepsy project Epidiolex and gave Sativex a lower profile.

So when news of a phase III Sativex miss emerged yesterday, GW was able to shield itself cleverly with an update on Epidiolex. Investors clearly bought this ploy as US-listed shares rose 13%. This is a risky ruse, however, as even more of the company’s near-term future now rests on the performance of the early-stage epilepsy programme.

Painful miss

Sativex, a cannabis-based oral spray, failed in the first of three pivotal trials to improve the symptoms of terminal cancer patients already receiving maintenance and breakthrough pain relief. The primary endpoint was improvement in average pain on a subjective scale, with worst pain and sleep disruption secondary endpoints.

Sativex is already marketed in 22 countries, including Canada and European jurisdictions, for relief of multiple sclerosis spasticity, and is in a pivotal study in that indication in the US.

Cancer pain is a bigger prize, however, accounting for more than half of all income in analysts’ forecasts. Thus the big miss weighs heavily in its outlook, as it suggests that there is little chance of the two remaining trials generating positive data.

Yet the miss did not discourage GW's executive team from dangling the hope of snatching victory from the jaws of defeat. In a call with analysts, R&D director Stephen Wright said this failed trial had seen better efficacy among patients enrolled at US sites, which used different background medications and generally younger patients; one of the remaining trials has an identical design but uses more US sites.

The second remaining trial, due to report later this year, has an “enriched” design that re-randomises a subset of patients shown to respond to Sativex. A study of this design was used to justify regulatory approval in MS spasticity, so it could have some weight in the cancer pain indication.

Look over there!

Thus it came in handy for GW also to be able to cushion the disappointment by announcing that the timeline for the first pivotal study of Epidiolex had been accelerated. Enrolment in trials for the rare subcategory of Dravet syndrome has been faster than expected, and data should be available by the end of 2015. In a second rare type of epilepsy, Lennox-Gastaut syndrome, a pivotal study should begin this year, and GW is “working toward” topline data by the end of 2015.

Much of the GW investment case now rests on the success of Epidiolex, with consensus forecasting sales of $382m in 2020, according to EvaluatePharma.

Presented with the scenario of failure now and success later – maybe – US investors chose to see the glass half-full and pushed shares up 13% to $80.11.

Sativex might be all but written off as a significant contributor to GW’s growth, so the group now needs Epidiolex to come through more than ever. Its success on the US Nasdaq exchange in the past two years – an incredible eightfold rise – has been fuelled by these hopes.

If US investors thought the promise of the epilepsy programme made the company eight times more valuable, one can only assume that in the event of failure the fall would be of an equal magnitude.

To contact the writer of this story email Jonathan Gardner in London at [email protected] or follow @JonEPVantage on Twitter