Zynerba Pharma (ZYNE) is down 27% premarket after reporting its second set of disappointing ZYN002 Cannabidiol clinical data in the last week.
Zynerba is a clinical-stage specialty pharmaceutical company dedicated to developing and commercializing innovative transdermal pharmaceutically-produced cannabinoid treatments.
The company reported top line results from its Phase 2 STOP (Synthetic Transdermal Cannabidiol for Treatment of Knee Pain due to Osteoarthritis) clinical trial evaluating ZYN002 (cannabidiol [CBD] gel). The study did not meet its primary endpoint of reduction from baseline in the weekly mean of the 24-hour average worst pain score at week 12 for either dose. However, statistically significant results were achieved for a number of secondary endpoints. Importantly, the composite responder analysis (defined as a =30 percent reduction in worst average daily pain scores and a =20 percent improvement in the WOMAC physical function score) for 250 mg daily of ZYN002 4.2% CBD gel achieved statistical significance (p=0.016). A trend toward statistical significance was observed in other secondary endpoints.
Still, Zynerba is looking to advance to a Phase 3 study. "Data from the STOP trial will help shape future studies with ZYN002 in osteoarthritis. We will request an end of Phase 2 meeting with the U.S. Food and Drug Administration, which we believe will take place before the end of this year, and plan to move quickly to our pivotal Phase 3 program for ZYN002 in OA."
Last Monday, the stock fell over 50% after the company disappointed investors with top-line results Phase 2 STAR 1 (Synthetic Transdermal Cannabidiol for the Treatment of Epilepsy) clinical trial evaluating ZYN002 in adult epilepsy patients with focal seizures. ZYN002 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.
The STAR trial disappointed investors who saw GW Pharma's (GWPH) success with its oral CBD treatment for specific types of epilepsy. Perhaps, the difference lies in the fact that Zynerba's drugs are synthetic while GW's lead product is a plant-derived cannabidiol. Zynerba is expected to announce more data from ZYN002 next month: B-C Exploratory Phase 2 Clinical in Pediatric Fragile X Syndrome Patients. At this point, expectations for this trial are probably pretty low.
At the end of the second quarter, Zynerba had $70 million in cash or ~$5/share, which the company said 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.
Zynerba now has a ~$65 million market cap, giving the company an enterprise value below zero. The Bears were right in this stock -- nearly 30% of the float is sold short.