Zynerba Test Fails, Shares Plunge Over 15%

Cannabinoids drug company Zynerba Pharmaceuticals, Inc. (ZYNE) reported that the top-line results from a Phase 1 clinical program studying ZYN001 failed and that it will abandon the drug and instead focus on ZYN002. The shares fell over 20% in pre-market trading, but at the open fell 16% to lately trade at $8.01.

The patent-protected, pro-drug of tetrahydrocannabinol (THC) was delivered via a transdermal patch, in healthy volunteers. The program assessed the safety and pharmacokinetics in single and multiple doses of several formulations of ZYN001. The study indicated that the target blood levels of 5 to 15 ng/ml THC were not achieved. The company did say that ZYN001 was very well tolerated with minimal skin erythema and that there were no serious adverse events or discontinuations for subjects receiving ZYN001.

ZYN001 was being developed for patients with fibromyalgia and peripheral neuropathic pain. The company’s website said that “THC is a CB1 agonist which acts at many sites along pain transmission pathways, and has been shown to have an analgesic effect in chronic pain models.”

In a statement, Zynerba said, “As a result of these data, the Company will focus its development efforts and investments on the ZYN002 Fragile X syndrome, developmental and epileptic encephalopathy (DEE) and adult refractory epilepsy programs. The Company expects that this change will extend its cash runway into the second half of 2019.”

Zynerba has also had issues with its studies on ZYN002. Last year the company had to report that its Phase 2 study was not a huge success. While patients did experience a reduction in seizures, it wasn’t a big statistical difference from the placebo. The news sent shares diving to a year’s low of $5.42. Since then, value players have been pushing shares higher on hopes of positive study results.

Seaport Global and Ladenburg Thalman both gave the stock Buy rating earlier this year according to Yahoo! Finance. The stock has an average price target of $17.50.

Investors seem to be tiring of the company’s suggestions that its studies are performing well, only to find out the results are less than satisfactory. Just two months ago, Zynerba said, “Zynerba is executing on a Phase 1 program to assess multiple formulations of ZYN001, a patent-protected, pro-drug of THC delivered via a patch. The Company expects to complete this study in the first half of 2018, and assuming supportive data, move into a Phase 2 clinical trial in Tourette Syndrome late in the second half of 2018.” The phrase “assuming supportive data” implies the study is probably performing as expected.

Zynerba has also seemed to try to ride the coattails of GW Pharmaceuticals (GWPH) studies. GW Pharmaceuticals has had very successful studies with its cannabinoid drugs for epilepsy and was recently approved by the FDA for Epidiolex. Yet, Zynerba’s epilepsy drugs had not had the same success.



Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

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