Blockbuster drugs are like rocket fuel for pharma stocks. When a hot new drug reaches blockbuster status with $1 billion in annual sales, two good things usually follow: Record revenue and record share prices.

This was recently on display with pharma industry leader Gilead (Nasdaq: GILD). In 2012, Gilead released a promising drug called Sovaldi designed to treat Hepatitis C.

Sovaldi was a big hit right away, reaching blockbuster status in its first year. That sent shares of Gilead soaring for the next three years. Take a look at the huge gains below.

Today, I see this same pattern unfolding.

One of the largest pharma companies in the high-growth cannabis sector is moving closer to the first ever cannabis blockbuster. Its promising new drug is in Phase 3 FDA testing, with a final decision expected by the end of 2017.

I wrote about the promise of the medical cannabis industry last November. Here’s what I said at the time:

This recent wave of legalization has given birth to the fastest-growing industry in North America. Market research firm Arcview is projecting North American legal cannabis industry sales to grow more than 200% in the next four years to $22.8 billion. Just like in 1933 when the federal government repealed the 18th amendment, this billion-dollar wealth transfer is creating a great investment opportunity.

Is This The Next Blockbuster Drug?
GW Pharmaceutical (Nasdaq: GWPH) is a well known company in the up-and-coming medical cannabis industry. The company is headquartered in Salisbury, United Kingdom, and has its primary listing on the London Stock Exchange (LSE), but shares are also available to U.S. investors through a secondary listing on the Nasdaq.

GW’s promising drug is Epidiolex, a drug designed to treat epilepsy.

#-ad_banner-#This is a potentially lucrative market for GW. Estimates suggest that 5 million people in the U.S. suffer from epilepsy. Despite that large number, the epilepsy drug market is considered to be underdeveloped. GW is attempting to fill that gap with Epidiolex.

The drug has already finished phase 3 FDA trials — the final stage of a multi-year process before a drug receives a final approval or denial. And based on recent data, the outlook for an approval is positive. I am expecting an approval. If it happens, both revenue and shares should hit a new all-time high.

Epidiolex has performed well under rigorous testing. For example, at the American Society of Epilepsy conference in December, GW revealed that Epidiolex cannabidiol reduced seizure frequency by more than 50% in 44.2% of recipients.

It also looks like Epidiolex could have additional applications beyond epilepsy. The drug is currently in Phase 3 trials for both tuberous sclerosis complex, a genetic brain cancer that effects 40,000 people in the U.S. and up to 2 million globally, and for infantile spasms.

Across these three potential applications, Epidiolex has major revenue potential. Assuming an FDA approval for Epidiolex, analysts are projecting annual sales between $800 million and $3 billion.  Breaking the $1 billion mark would make Epidiolex a blockbuster, putting it in rare territory. In 2015 only 11 new drugs entered blockbuster status. In 2016 that number fell to seven.

Looking forward, GW expects to receive an FDA ruling on Epidiolex by the end of 2017.

GW Is Up 170% In The Last 12 Months
Epidiolex has not gone unnoticed. GW is up 194% in the last 12 months. That has shares trading just below the all-time high near $137.

The Wall Street consensus price target for GW is $185. This implies 55% upside from current levels. That bullish projection is pricing in the approval for Epidiolex.

Risks To Consider: GW has a lot riding on Epidiolex. It needs to score an FDA approval in 2017 in order to commercialize.

Action To Take: GW is on a roll. Clinical data on Epidiolex looks promising and shares are trading just below the all-time high. I am expecting the FDA to grant final approval for Epidiolex in the first half of 2017, setting the stage for shares to rally into a new all-time high.

Editor’s Note: Looking for more? Here are StreetAuthority’s game-changing stock buys for 2017. In the last few years they’ve seen gains of 296%… 545%… even as much as 696%! But a single new technology is poised to make 2017 their biggest year yet… Full story…