UPDATE 1-RESEARCH ALERT-Landsbanki starts GW Pharma with buy

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Aug 27 (Reuters) - Landsbanki Securities started coverage of Britain's GW Pharmaceuticals Plc (GWP.L) with a "buy" rating, as it expects positive clinical data from GW's lead drug candidate, Sativex, in the first quarter of 2009.

Sativex, a cannabis-based medicine, has multiple applications and a relatively high chance of getting approval, Landsbanki said.

The brokerage said it expects positive clinical data for Sativex in two indications, namely multiple sclerosis-related spasticity and cancer-related pain, to boost GW's share price.

By 2013, the brokerage sees combined sales of 84 million pounds from both indications, with net royalties to GW of 21.7 million pounds, after cost of goods sold.

"Despite GW's dependence on a single compound (Sativex), we believe it remains undervalued," the brokerage wrote in note. It has a price target of 71 pence on GW stock.

GW shares closed at 36.50 pence on Tuesday. (Reporting by Kumar Alagappan in Bangalore; Editing by Himani Sarkar)