We first came across GW Pharma in mid-2020, at a time when they were a well-established, mature company continuing to innovate in the pharmaceutical space.
In an attempt to find another company that had the potential to grow to the same level of maturity, we found Cardiol Therapeutics; Cardiol is even referred to as an “early-stage GW” in the biotech space. While many may view these companies as another cannabis play due to the use of cannabidiol in their studies, this acquisition of GW by Jazz Pharmaceuticals (a global behemoth of a biopharmaceutical company), proves that there’s much more than that going on here.
GW evidently brings a lot of value to a company like Jazz, which can utilize GW’s cannabidiol formulation to enhance their neuroscience pipeline. Naturally, the expertise coming from both companies complement one other, as GW comes on as an innovative arm that beefs up the overall biopharmaceutical body that is Jazz Pharmaceuticals. Epidiolex, the epilepsy medication by GW, has the potential to reach blockbuster status with the reach and commercial infrastructure of Jazz.
So, why are we focusing on Cardiol?
First and foremost, Cardiol has a product that is already selling through Canada’s largest drug store chain, Shopper’s Drug Mart, which is being targeted at the paediatric market, including childhood epilepsy; GW proved the effectiveness of this in the U.S. but has left the opportunity open for Cardiol to capitalize on in Canada. This alone is a $100M opportunity, and it isn’t even the central focus of Cardiol’s business. As a small-cap company that currently sits at less than 1/50th the market capitalization of GW, we know how much room there is to grow here.
Plus, the product that Cardiol is producing is an ultra-pure, THC-free, lower-cost alternative to GW’s product. That’s right, they’re able to produce and sell a CBD product that is legitimately THC-free for less money than the big guys. If you’re confused as to why this is a big deal, check out our in-depth analysis of the opportunity here.
If a monstrous $6.6B company like GW can be an acquisition target for a global biopharmaceutical company to add to their portfolio, then why wouldn’t a smaller company, with a $125 million market cap and a cost advantage over GW themselves, be an even more desirable target?
We truly believe Cardiol will not be under-the-radar for long, as the investing world seems to be catching on to the potential of cannabidiol products to make a substantial footprint in the biopharmaceutical world. Following this news, GW Pharma ($GWPH) opened up at $214 this morning, a 47% surge from their previous close.
Cardiol (Canada: CRDL) (U.S.: CRTPF) (Europe: CT9) has also soared 20%+ at the time of writing, proving that some sophisticated investors are already making the connection here.
We like to stay ahead of the curve, which is why we have our eyes on Cardiol Therapeutics. Should a large biopharma company with a strong cash flow like Jazz happen to come along and discover Cardiol, we truly believe they will make their mark on the world.
Disclaimer: Cardiol Therapeutics is a communications client of Edge Investments, and we own shares in the company.