• Today, we revisit a small developmental firm called Zynerba Pharmaceuticals.
• The company is advancing its primary drug candidate Zygel across several indications and the shares trade near the company’s cash balance.
• A full investment analysis is presented in the paragraphs below.

“There is no complexity in what is, but only in the many escapes that we seek.” – Jiddu Krishnamurti

Today, we are looking back in on Zynerba Pharmaceuticals (NASDAQ:ZYNE) for the first time since the start of 2021. This is a name some recent inquiries have come in from Seeking Alpha followers, so it seems a good time to revisit this small biotech concern. A full analysis is as follows.

Company Overview:

Zynerba is a clinical-stage biotech concern based just outside of Philadelphia. The company’s current focus is to continue to advance Zygel in development, the first and only pharmaceutically-produced CBD formulated permeation-enhanced gel for transdermal delivery through the skin and into the circulatory system. Cannabinoids interact with specific receptors and pathways implicated in a range of diseases throughout the body to produce pharmacologic effects. The company is focused on the Central Nervous System space in their development efforts as cannabinoids have demonstrated positive effects in the CNS and is non-euphoric and non-addictive. The stock trades just under $4.00 a share and the company has not rewarded longtime shareholders to this point (see above). The current market cap of the company is approximately $100 million.

Source: September Company Presentation

The company’s core and really sole focus is developing Zygel as it believes this compound has potential unique features that could treat a variety of rare disease indications. The most advanced of these efforts is evaluating Zygel to treat Fragile X Syndrome.

Source: September Company Presentation

This rare affliction affects some 70,000 individuals in the United States and currently has no FDA-approved treatments. Zygel is currently being evaluated in an ongoing study, FX-Connect, which has had some mixed results to date.

Source: September Company Presentation

In addition, a pivotal, confirmatory trial “RECONNECT” is underway and a key topline Phase 3 readout should happen sometime in the second half of 2023.

Source: September Company Presentation

Zygel is also being evaluated for other disorders including Autism Spectrum Disorder [ASD], Deletion Syndrome, and Developmental and Epileptic Encephalopathies [DEE]. The most promising and advanced effort is in ASD.

Source: September Company Presentation

A Phase 2 study evaluating the safety and efficacy in treating ASD showed some significant impacts on key metrics. The company has received positive guidance from the FDA around next steps for this indication and leadership should detail the path forward for this indication by the end of this year.

Source: September Company Presentation

Analyst Commentary & Balance Sheet:

Since early May, four analyst firms including Cantor Fitzgerald and Canaccord Genuity have reissued Buy ratings on the stock. Price targets proffered are in a tight range of $8 to $9 a share. Needham seems the lone pessimist on the shares, reissuing a Hold rating on August 9th.

The company ended the first half of this year with just over $85 million in cash and marketable securities after posting a net loss of $10 million for the second quarter. Leadership stated on its conference call following the earnings release that this cash position is ‘sufficient to fund operations and capital requirements well into the first half of 2024‘. There has been no insider selling or buying in Zynerba’s shares so far in 2021.

Verdict:

Source: September Company Presentation

The good news about Zynerba is that it has more than enough cash runway to get to critical topline results for Zygel in Fragile X Syndrome in the second half of 2023. Cash on hand almost equals the stock’s market capitalization at current trading levels.

The bad news is there is unlikely to be a major catalyst, outside of the unlikely event of a buyout, between now and then. In addition, as another recent article on Seeking Alpha points out, the company has had a bumpy developmental journey with several trial failures along that road.

Therefore, the only way I personally can play this name is within covered call holdings as my bet is stock trades sideways and the cash balance provides a floor for the shares. Options liquidity varies by the day around ZYNE, but patient investors will get their covered call orders filled. Outside of that, I have no investment recommendation on Zynerba currently.

“Perfect logic applied to insufficient information in limited time almost always results in a flawed decision” – Gyan Nagpal

Bret Jensen is the Founder of and authors articles for the Biotech Forum, Busted IPO Forum, and Insiders Forum

Analyst’s Disclosure: I/we have a beneficial long position in the shares of ZYNE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I own a small holding of ZYNE through a covered call position.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Author’s note: I present and update my best small-cap Busted IPO stock ideas only to subscribers of my exclusive marketplace, The Busted IPO Forum. Try a free 2-week trial today by clicking on our logo below!

The post Revisiting Zynerba Pharmaceuticals appeared first on Up2info.com.

• ZYNE has a cannabidiol gel it is running through various trials.
• The company and this drug have a history of failures.
• Despite some positives in a subgroup analysis, the failures do not inspire confidence.

Zynerba (NASDAQ:ZYNE) is a mid stage clinical company focusing on pharmaceutically-produced transdermal cannabinoid therapies for rare and near-rare neuropsychiatric disorders. Its pipeline is here:

Source

The company has only one product candidate being run through these various trials. This product is Zygel, a cannabidiol gel. Lead indication is Fragile X Syndrome or FXS, where it has completed phase 2 trials and will begin a confirmatory trial by 2021.

FXS is a rare genetic condition affecting approximately 71,000 Americans and with no approved drugs. It causes intellectual disability, anxiety disorders, social avoidance, behavioral and learning challenges and various physical characteristics. It is the leading known genetic cause of both inherited intellectual disability and autism spectrum disorder. Patients are born with a mutated gene responsible for regulating the endocannabinoid (EC) system. Zygel modulates multiple receptors and mediates numerous pathways, including the endocannabinoid pathway. It is the first and only patent- protected, permeation-enhanced, pharmaceutically-produced transdermal cannabidiol gel, with patent protection up to 2038.

Trial data

A phase 2 trial called CONNECT-FX has been run by the company comparing Zygel to placebo in 212 patients, both children and adolescents. A set of patients with ≥90% FMR1 methylation (167 total ~80% of trial population) have been included in pre-planned ad hoc analyses. The primary endpoint was: change from baseline to end of treatment in ABC-CFXS Social Avoidance subscale. Key secondary endpoints were: Change from baseline to end of the treatment in –

• ABC-CFXS Irritability subscale score
• ABC-CFXS Socially Unresponsive/Lethargic subscale score
• Improvement in Clinical Global Impression (CGI-I) at end of treatment, anchored to FXS behaviors

Efficacy data was as follows:

Source

According to this data, the trial failed to meet its primary endpoint with statistical significance. However, in a subgroup of severely impacted patients defined as those having at least 90% methylation (full methylation) of the impacted FMR1 gene, Zygel met the primary endpoint. This group/comprised 80% of the total enrolled patient population. Full methylation occurs in ~60% of FXS patients.

The drug was well tolerated, with no serious adverse events. The most significant adverse event was application site pain. There were 7 patients with psychiatric disorder TEAEs; 5 were in the placebo group.

For approval, Zynerba plans to conduct a single double blind, placebo controlled pivotal trial in patients with a highly methylated FMR1 gene to confirm results seen in CONNECT- FX responders. The primary endpoint of this confirmatory trial will be the same as in the phase 2 trial. The difference will be that they will focus on the patient population where, in post hoc analysis, they saw statistically significant improvement.

The company also released results from the BRIGHT phase 2 trial in autism spectrum disorder. Statistically significant results were seen at 14 weeks compared to baseline.

Source

A trial in children with Developmental and Epileptic Encephalopathy was also successful in phase 2.

Financials

ZYNE has a market cap of $175mn and a cash balance of $59mn as on December 31, 2020. From January 1, 2021 to February 9, 2021 they raised net proceeds of $42.2 million through the sale of 10.2 million shares of equity through their “At The Market” sales agreement, which, adding to the previous balance, the company says is enough to support operations to 2024.

Bottom line

There was a time when Zynerba hoped to rival GW Pharma in the cannabinoid drug development. However, while GW Pharma was bought out by Jazz Pharma in a $7.2bn deal, Zynerba still remains a nanocap. This is because, in the last 4 years, it has failed four trials – epilepsy, osteoarthritis, a trial for THC as a patch, and this FXS trial. However, there may be some light at the end of the tunnel. Here, it could be in the subgroup analysis which will now form a basis for the confirmatory trial. However, the repeated failures do not inspire confidence in investors. We plan to remain on the sidelines.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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The post Zynerba: Repeated Trial Failures, Some Post Hoc Success appeared first on Up2info.com.

• Today, we revisit small biopharma Zynerba Pharmaceuticals for the first time in just over a year.
• The company plans to launch a key trial before the end of the year targeting Fragile X Syndrome and has seen some more positive analyst commentary recently.
• We peek back in on Zynerba Pharmaceuticals in the paragraphs below.

We are going to peek back in on small biopharma Zynerba Pharmaceuticals (NASDAQ:ZYNE) since we posted an article on it to begin 2020. At the time, we recommended the shares were no more than a small ‘watch item’ and preferably only through establishing a holding via covered call orders.

The world has obviously changed a lot over the past year. Has the situation changed for Zynerba? I have gotten a few questions on this small cap name in recent months from followers here on Seeking Alpha, so we will examine that question in the paragraphs that follow.

Company Overview:

Zynerba is a small ‘Tier 4‘ developmental concern based just outside of Philadelphia. The company’s current developmental efforts are centered around Zygel, the first and only pharmaceutically-produced CBD formulated permeation-enhanced gel for transdermal delivery through the skin and into the circulatory system. The stock trades just north of $3.50 a share and the company has not rewarded longtime shareholders to this point (see above). The current market cap of the company is approximately $100 million.

Recent Developments:

Source: Company Presentation

Zynerba is targeting several indications with Zygel. The company suffered a significant setback in early summer as on June 30th it reported unsuccessful results from Phase 2/3 trial evaluating Zygel in children and adolescents with FXS. The company met with the FDA late in 2020 and is currently designing a new pivotal trial that will be a ‘double-blind, placebo-controlled trial in patients with FXS who have a highly methylated FMR1 gene to confirm the positive results observed in this population of responders in the CONNECT-FX trial‘. The company plans to meet again with the government agency before the first half of this year around the design of this new study and plans to launch this key trial before the end of 2021.

Source: Company Presentation

In mid-October, Zygel did produce some positive data targeting Autism in a Phase 2 trial. A month earlier, Zygel garnered Orphan Drug status from the FDA targeting DiGeorge Syndrome. The company plans to meet with the FDA regarding its recent study on autism to discuss a regulatory path forward sometime in the first half of this year.

Source: Company Presentation

Analyst Commentary & Balance Sheet:

The analyst community was dormant on Zynerba from the time of its disappointing trial results in late June to Mid-December. Since then Canaccord Genuity ($9 price target), Ladenberg Thalmann ($8 price target) and H.C. Wainwright ($9 price target) have all reissued Buy ratings on ZYNE while Needham reiterated its Hold rating. Insiders have not sold a share of ZYNE since August of 2016. Of course, the last insider purchase of the shares was in August of 2018.

The company has nearly $65 million in cash and marketable securities on the balance sheet at the end of the third quarter. The company states this is sufficient to fund all operation activities until 2023.

Source: Company Presentation

Verdict:

The company has some positives going for it. It has several ‘shots on goal’ and is advancing its pipeline on multiple fronts. It is also well funded at the moment and has some recent analyst support. On the down side, the June trial results for Fragile X had undermined investor faith that the company will be successful eventually targeting this indication even as it is planning a key trail to tackle this rare disease. There are some mild milestones on the horizon (like, meetings with the FDA).

However, there is no big compelling reason to invest in ZYNE at the moment. And if I were to do so I would do so via covered call orders. Utilizing the August $5 call strikes you should be able to garner 70 to 75 cents a share for the option premiums, which would provide approximately 20% of downside protection through the duration of the position while still allowing considerable potential upside. Other than that, I think the best course of action is to pass on any investment recommendation on the stock right now and plan to revisit Zynerba again in a year when its key Fragile X trial is hopefully well underway.

Bret Jensen is the Founder of and authors articles for the Biotech Forum, Busted IPO Forum, and Insiders Forum.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in ZYNE over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Author’s note: I present and update my best small-cap Busted IPO stock ideas only to subscribers of my exclusive marketplace, The Busted IPO Forum. Our model portfolio has crushed the return of the Russell 2000 since its launch in the summer of 2017.  To join the Busted IPO Forum community, just click on the logo below.

The post Zeroing In On Zynerba Pharmaceuticals appeared first on Up2info.com.