Why GW Pharmaceuticals Stock Jumped 17.7% in September

What happened

GW Pharmaceuticals (NASDAQ: GWPH) stock jumped 17.7% in September, according to data from S&P Global Market Intelligence.

Most of this gain, however, was given back over the past week, as shares lost 12.5% in the first week of October. The U.K.-based biopharmaceutical company's stock has gained 33.1% over the one-year period through Oct. 5.

For some context, the S&P 500 index returned 0.6% last month and has returned 15.3% over the last year.

So what

We can attribute GW Pharmaceuticals stock's strong September performance to a favorable, not to mention groundbreaking, ruling from the U.S. Drug Enforcement Administration. The DEA classified the company's Epidiolex, which has been approved by the U.S. Food and Drug Administration to treat patients with two forms of epilepsy, as a Schedule V drug. This is the least restrictive prescribing category of controlled substances.

As background, GW Pharmaceuticals received FDA approval for Epidiolex in June. However, because the drug is made from cannabidiol (CBD), which is derived from marijuana, the DEA needed to get involved in classifying it. That's because prior to this groundbreaking ruling, marijuana and, thus, all marijuana-derived products automatically fell into the most restrictive Schedule I classification because marijuana is not legal in the U.S. on a federal level.

Now what

Now that Epidiolex has cleared what appears to be its last regulatory hurdle, investors should focus on how well the drug sells once it comes to market. It's on track to come to market this fall.

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Beth McKenna has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.