Laurie Don

Cannabinoid approval supports GW’s strategy

Laurie Don

NHS England has given the go-ahead for two cannabis-based medicines to be used for the first time, potentially providing relief for thousands of epilepsy and multiple sclerosis sufferers.

Both come from UK firm GW Pharmaceuticals, the global leader in cannabinoid-based treatments, held in the Liontrust Sustainable Future funds since the early 2000s. Over 10 years to the end of October, GW has produced a total return of 877.5% in sterling terms*.

Investing in companies that seek genuine benefits for the world is a key part of our Sustainable strategy and GW comes under our Enabling innovation in healthcare theme. The company focuses on areas of unmet need such as rare forms of childhood epilepsy: its Epidyolex product (called Epidiolex in the US) launched in the US last November and has greatly surpassed Wall Street's initial sales forecasts. 

Fifty million people worldwide are estimated to have epilepsy but research into therapies has been relatively underfunded and 30-40% of patients are resistant to the drugs currently available. By focusing on orphan diseases (defined in Europe as affecting fewer than one person per 2000), not only does GW help those with serious needs, it also receives benefits including longer exclusivity and a cheaper/quicker registration process.

England’s GPs can now prescribe Epidyolex for the first time, with the drug helping children with several types of severe epilepsy including Lennox Gastaut syndrome and Dravet syndrome. Clinical trials have shown the oral solution, which contains cannabidiol (CBD), could reduce the number of seizures by as much as 46% in some children.

We anticipate benefits being proven for further severe forms of epilepsy such as Tuberous Sclerosis Complex and the drug also has the potential to help in areas such as Autism Spectrum Disorders and Schizophrenia.

This follows new guidelines from drugs advisory body NICE (the National Institute for Clinical Excellence), which looked at GW’s products for several conditions. Epidyolex was approved for use in Europe in September but draft guidance from NICE raised concerns about both the economic and insufficient long-term clinical results.

GW has subsequently agreed a lower discounted price with the NHS and this represents the first-time any plant-derived cannabis-based medicine has been recommended by NICE.

While Epidyolex does not contain Tetrahydrocannabinol (THC), the main psychoactive component of cannabis, GW’s other treatment, mouth spray Sativex, includes a mix of THC and CBD.

Doctors can also now prescribe this to treat muscle stiffness and spasms in multiple sclerosis but not for pain. Sativex was the first cannabis-based medicine to be licensed in the UK and has been available on the NHS in Wales since 2014.

We continue to look for opportunities in companies meeting unmet medical needs in this way and see considerable further upside potential in GW Pharmaceuticals as it as it carries on down this innovative path.

*Source: Bloomberg, 31.10.09 to 31.10.19.

 

For a comprehensive list of common financial words and terms, see our glossary here. 


Key Risks


Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. The majority of the Liontrust Sustainable Future Funds have holdings which are denominated in currencies other than Sterling and may be affected by movements in exchange rates. Some of these funds invest in emerging markets which may involve a higher element of risk due to less well-regulated markets and political and economic instability. Consequently the value of an investment may rise or fall in line with the exchange rates. Liontrust UK Ethical Fund, Liontrust SF European Growth Fund and Liontrust SF UK Growth Fund invest geographically in a narrow range and has a concentrated portfolio of securities, there is an increased risk of volatility which may result in frequent rises and falls in the Fund’s share price. Liontrust SF Managed Fund, Liontrust SF Corporate Bond Fund, Liontrust SF Cautious Managed Fund, Liontrust SF Defensive Managed Fund and Liontrust Monthly Income Bond Fund invest in bonds and other fixed-interest securities - fluctuations in interest rates are likely to affect the value of these financial instruments. If long-term interest rates rise, the value of your shares is likely to fall. If you need to access your money quickly it is possible that, in difficult market conditions, it could be hard to sell holdings in corporate bond funds. This is because there is low trading activity in the markets for many of the bonds held by these funds. Mentioned above five funds can also invest in derivatives. Derivatives are used to protect against currencies, credit and interests rates move or for investment purposes. There is a risk that losses could be made on derivative positions or that the counterparties could fail to complete on transactions.

Disclaimer

The information and opinions provided should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Always research your own investments and (if you are not a professional or a financial adviser) consult suitability with a regulated financial adviser before investing.

Thursday, November 14, 2019, 10:40 AM