Why GW Pharmaceuticals Stock Is Shrugging Off the Brexit Sell-Off

Image source: Getty Images.

What: While the broader markets are heading south today on the Brexit vote, shares of GW Pharmaceuticals gained as much as 12.4% on a positive clinical update for its marijuana-derived epilepsy medicine Epidiolex. Specifically, the company reported that Epidiolex-treated patients suffering from a rare form of childhood epilepsy known asLennox-Gastaut syndrome (LGS) experienced a significant reduction indrop seizure rate compared to those receiving a placebo.

So what:Epidiolex has now hit the mark in two late-stage studies, with the drug meeting its primary endpoint in another pivotal trial last Marchfor Dravet syndrome, a severe form of epilepsy that presents in early childhood. The broader issue at play is that clinical evidence actually supporting the use of marijuana-based medicines has been sparse so far due to the drug's Schedule I status. So, GW's late-stage successes for Epidiolex are in many ways breaking new ground.

Now what: GW is presently conducting a second late-stage study for Epidiolex in LGS that's expected to produce top-line results by the third quarter of 2016. As such, the company could file for the drug's regulatory approval for hard-to-treat childhoodepilepsies perhaps as early as the first quarter of 2017.

While that's all well and good, it's next to impossible to predict how the FDA is going to handle a regulating filing for a marijuana-derived medicine. After all, the agency has little real-life experience with these types of pharma products, and the debate over the medical benefits of marijuana -- or its derivatives -- is far from resolved. I think GW's stock is still trading almost purely on speculation, meaning that investors may want to stick to the sidelines with this high-flying marijuana stock for the moment.

The article Why GW Pharmaceuticals Stock Is Shrugging Off the Brexit Sell-Off originally appeared on Fool.com.

George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright 1995 - 2016 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.