Zynerba Pharmaceuticals (NASDAQ: ZYNE)
Zynerba Pharmaceuticals (NASDAQ: ZYNE) is a clinical-stage specialty pharmaceutical company focused on developing and commercializing proprietary next-generation synthetic cannabinoid therapeutics formulated for transdermal delivery.
Zynerba is one of the largest cannabinoid-focused pharmaceutical companies in the world, and had been developing transdermal synthetic cannabinoid treatments for a few years now.
The company’s share prices have declined significantly after disappointing epilepsy trial results. The group’s mid-stage clinical trial for ZYN002 – a cannabidiol gel in adult epilepsy with partial seizures didn’t meet its primary or secondary endpoints. It did not demonstrate a statistically significant reduction of focal seizures during the treatment period compared to the baseline period for either the high or low dose cohorts compared to placebo.
In terms of market size, there are above 2.4 million U.S. populations with epilepsy. Of those, 1.5 million have focal seizures. The global epilepsy market is expected to cross $5 billion by 2024. Due to the failed trail a significant business opportunity got deferred for the company.
Moreover, from a competitive landscape perspective, the disappointing results of ZYNE, could reflect well on rival GW Pharmaceuticals PLC. GW Pharma already sells a cannabinoid prescription drug, Sativex, which treats multiple sclerosis spasticity and is sold outside of the U.S. For GW Pharma, this is positive news about less potential competition in the treatment of epilepsy.
Setting aside aforesaid failure, the group would continue to evaluate this study and the ongoing STAR 2 open label study to determine next steps with ZYN002 in adult epilepsy patients. In fact, the results demonstrated ZYN002 to have a very favorable safety and tolerability profile, which is an encouraging fact as ZYNE look to develop ZYN002 as a treatment for a wide range of indications.
The management is now focusing on other near term catalysts and looking forward to present top-line data from its ZYN002 STOP trial in osteoarthritis soon, followed by top-line data from FAB-C study in Fragile X syndrome by the end of September. Additionally, Zynerba is bidding to develop treatments for severe, chronic health conditions including epilepsy, Fragile X syndrome, osteoarthritis, fibromyalgia and peripheral neuropathic pain.
Therefore, notwithstanding the muted performance, core fundamentals (over the longer term) of the company continue to remain promising. Considering recent developments, upcoming osteoarthritis phase 2 data and significantly lower prices, analyst has revised their outlook on the stocks. The stock currently has an average rating of “BUY” and a consensus price target of $12.50.
About the Company: Zynerba Pharmaceuticals (NASDAQ: ZYNE) is focused on severe health conditions where there is a high unmet medical need by developing and commercializing pharmaceutically-produced transdermal cannabinoid medicines designed to meet the rigorous efficacy and safety standards established by global regulatory agencies.
Through the discovery and development of these life-changing medicines, Zynerba seeks to improve the lives of patients battling severe, chronic health conditions including epilepsy, Fragile X syndrome, osteoarthritis, fibromyalgia and peripheral neuropathic pain.
Major Pipelines: The Company’s development pipeline includes two lead product candidates, ZYN002 and ZYN001, which are being evaluated in five therapeutic indications.
About ZYN002: Zynerba’s ZYN002 CBD gel is the first and only pharmaceutically produced CBD formulated as a patent-protected permeation-enhanced gel and is being studied in adult epilepsy patients with focal seizures, in osteoarthritis and in children with Fragile X Syndrome. ZYN002 is a clear, permeation-enhanced gel that is designed to provide controlled drug delivery transdermally with once- or twice-daily dosing.
About ZYN001: ZYN001 is a pro-drug of THC that enables transdermal delivery through the skin and into the circulatory system via a patch. A Phase 1 clinical program for ZYN001 was initiated in the first half of 2017.
Other recent achievements & upcoming catalysts:
Completed Dosing of Phase 2 STOP Clinical Trial for ZYN002 CBD Gel in Adult Osteoarthritis Patients; Top Line Data Expected this Month: Dosing is complete in the randomized, double-blind, placebo-controlled Phase 2 STOP trial in osteoarthritis of the knee. ZYNE exceeded the initial target enrollment of 300 patients with 320 patients randomized into one of three dosing groups. Patients received either 250 mg or 500 mg of CBD in ZYN002 4.2% gel or placebo daily for 12 weeks. The primary endpoint of the trial is the change from baseline in the weekly mean of the 24-hour average worst pain score at week 12.
Completed Enrollment in FAB-C Exploratory Phase 2 Clinical Trial of ZYN002 CBD Gel in Pediatric Fragile X Syndrome Patients; Top Line Data Expected in September 2017: Enrollment is complete and dosing is ongoing in the Phase 2 exploratory FAB-C clinical trial designed to evaluate the safety and efficacy of ZYN002 CBD gel administered over a 12-week period in pediatric patients with Fragile X syndrome (FXS). The U.S. Food and Drug Association has granted orphan-drug designation to ZYN002 CBD gel for the treatment of Fragile X syndrome.
Initiated Phase 1 Program for ZYN001 Pro-drug of Tetrahydrocannabinol (THC) Delivered via Transdermal Patch: The Company has initiated a Phase 1 program to assess ZYN001, a patent-protected; pro-drug of THC delivered via a patch. This first in man study is a randomized, double blind, placebo-controlled Phase 1 trial. First, the safety, tolerability and pharmacokinetic profile of a single dose of ZYN001 versus placebo will be evaluated. Results from this study will inform the planned Phase 2 program for ZYN001 in fibromyalgia and neuropathic pain, expected to initiate in the fourth quarter of 2017.
First Quarter 2017 Financial Results:
As of June 30, 2017, cash and cash equivalents were $70.2 million, compared to $77.5 million as of March 31, 2017. Research and development expenses for the second quarter of 2017 were $5.7 million, including stock-based compensation of $0.6 million. General and administrative expenses for the second quarter of 2017 were $2.6 million, including stock-based compensation expense of $0.8 million. Net loss for the second quarter of 2017 was $8.3 million with basic and diluted net loss per share of $0.64.
The Company has incurred losses and negative cash flows from operations since inception and has an accumulated deficit of $61.6 million as of June 30, 2017. The Company anticipates incurring additional losses over near to medium term. In fact, its primary source of liquidity has been the issuance of equity securities and convertible promissory notes.
The Company believes that the current cash and cash equivalent position of $70.2 million is sufficient to develop five Phase 3-ready programs and, assuming support from the FDA to move forward, initiate at least one Phase 3 program and fund operations and capital requirements into 2019.
Key risk factors and potential stock drivers:
Companies developing cannabidiol therapies need government approval to claim medical benefits, and industry insiders are still unsure what the FDA’s stance on approving a cannabidiol drug might be.
After the recent disappointment, Zynerba is now having two upcoming clinical trials towards the end of August and in September. One will be a ZYN002 treating patient with osteoarthritis. Other is treating patients with a rare genetic disorder known as Fragile X Syndrome. The positive results of these 2 trials could result into strong near to medium term trigger for the company.
Zynerba Pharmaceuticals has around $70 million in cash as of the period ending June 30, 2017. The company burns on average around $7.6 million each quarter. The company expects cash availability up until 2019. Therefore, investors should expect dilution at least 6 months out before then.
On Friday, August 11th, 2017, ZYNE is trading at $7.03 (down -3.17%) on an above average volume of 1.06 million shares exchanging hands. Market capitalization is $90.25 million. The current RSI is 24.60
In the past 52 weeks, shares of ZYNE have traded as low as $5.93 and as high as $25.95.
At $7.03, shares of ZYNE are trading below its 50-day moving average (MA) at $16.59 and below its 200-day MA at $17.86
The present support and resistance levels for the stock are at $6.72 & $7.33 respectively.
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