Zynerba Pharmaceuticals Inc: Best-Performing Cannabis Stock In First Half of 2019

Zynerba Pharmaceuticals Inc CBD Biotech Stock Up 355% In 2019
iStock.com/Witthaya Prasongsin

Zynerba Pharmaceuticals Inc Remains Bullish

The first half of 2019 was very kind to the markets in general, with all of the major indices trading near or at record levels. And cannabis stocks continue to be some of the best plays.

The top cannabis stock in the first half of 2019 isn’t one of the more common names you hear being discussed around the water cooler. Nevertheless, Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE) saw its share price advance 355% in the first half of 2019, rising from a $2.98 opening price on January 2 to a closing price of $13.55 on June 30.

Zynerba is a clinical-stage specialty pharmaceutical company developing transdermal (under the skin) cannabinoid therapies to treat rare conditions.

As a development-stage biotech company, earnings are not nearly as important as positive drug trials, patents, and approval from the Food and Drug Administration (FDA). Which is exactly what has been helping juice the Zynerba stock price.

Zynerba Pharmaceuticals Overview

As just mentioned, Zynerba Pharmaceuticals Inc is a biotech firm that specializes in developing transdermal cannabinoid therapies that treat rare and near-rare conditions that affect the central nervous system and immune systems. (Source: “Our Mission,” Zynerba Pharmaceuticals Inc, last accessed July 8, 2019.)

Transdermal therapies are considered to be more efficacious than oral drugs because they are directly absorbed into the circulatory system, avoiding the gastrointestinal (GI) tract. That reduces the chance of GI-related problems. This method also allows for lower dosages and improved safety.

Zynerba’s flagship product, which is still in the clinical development stage, is “Zygel,” a transdermal cannabidiol (CBD) gel that is used to treat Fragile X syndrome, Autism Spectrum Disorder (ASD), and rare epilepsy syndromes.

Zygel is the lone pharmaceutically produced CBD gel being developed for transdermal delivery.

In early May, Zynerba received “Fast Track” designation by the FDA for Zygel in the treatment of FXS. Fast Track designation helps biotech firms develop their drugs more quickly and speeds up the approval process. (Source: “Zynerba Pharmaceuticals Receives Fast Track Designation for Zygel for the Treatment of Behavioral Symptoms Associated with Fragile X Syndrome (FXS),” Zynerba Pharmaceuticals Inc, May 6, 2019.)

The company expects the initial results from a study evaluating Zygel in children and adolescents with developmental and epileptic encephalopathies to be released in the third quarter of 2019

Top-line data from a study evaluating the safety and efficacy of Zygel for the treatment of children and adolescents with ASD is expected in the first half of 2020.

Data from a Phase 2 trial evaluating the safety and efficacy of Zygel for treating Deletion Syndrome is also expected in the first half of 2020.

In June, the company received a U.S. patent for treating ASD with Zygel. The new patent expires in 2038, although the company continues to look to expand its patent protection and find other market exclusive opportunities. (Source: “Zynerba Pharmaceuticals Receives New U.S. Patent for Treatment of Autism Spectrum Disorder with Cannabidiol,” Zynerba Pharmaceuticals, Inc, June 11, 2019.)

ZYNE Stock Information
Market Cap $313.0 Million
52-Week Change 52.6%
52-Week High $16.47
52-Week Low $2.75
50-Day Moving Average: $13.09
200-Day Moving Average: $8.17

(Source: “Zynerba Pharmaceuticals, Inc. (ZYNE),” Yahoo! Finance, last accessed July 8, 2019.)

ZYNE stock had great momentum in the first half of 2019, rising on the heels of investor optimism, Fast Track designation for Zygel, and a patent for treating ASD with Zygel.

In fact, because the company isn’t reporting any revenue, all movement with ZYNE Pharmaceuticals stock is a result of encouraging developments associated with Zygel.

That said, Zynerba stock could reverse just as quickly on poor test results. For now though, the future looks bright for this stock.

Chart courtesy of StockCharts.com

First-Quarter Results

On May 8, Zynerba announced its financial results for the first quarter ended March 31, 2019.

In the first quarter, the company announced a net loss of $9.1 million, or $0.47 per share, compared to a loss of $12.3 million, or $0.91 per share, in the same prior-year period. (Source: “Zynerba Pharmaceuticals Reports First Quarter 2019 Financial Results and Operational Highlights,” Zynerba Pharmaceuticals Inc, May 8, 2019.)

Again, as a development-stage company, Zynerba is not generating any revenue. What’s most important is that it has enough cash to keep going. The company ended the first quarter with cash and cash equivalents of $68.3 million, compared to $59.8 million at the end of the fourth quarter of 2018.

Management believes this cushion of cash is enough to fund operations and capital investments into the first quarter of 2021. This date goes beyond the potential approval of Zygel for the treatment of FXS.

“We are entering a transformational period for Zynerba during which we expect top line data from four neuropsychiatric disorder trials with Zygel, our patent protected CBD gel,” said Armando Anido, Chairman and CEO.

Anido added,

Over the next 14 months, we expect to announce data from the CONNECT-FX pivotal trial in Fragile X, our Phase 2 BELIEVE 1 trial in developmental and epileptic encephalopathies, our Phase 2 BRIGHT trial in Autism Spectrum Disorder, and the Phase 2 trial in 22q11.2 Deletion Syndrome that we intend to initiate this quarter.

(Source: Ibid.)

Analyst Take

Zynerba Pharmaceuticals Inc is a great small-cap biotech stock operating in the cannabis sector.

Thanks to Fast Track designation from the FDA and a U.S. patent, Zynerba stock soared in the first six months of 2019.

Just because the company’s share price shot up by an eye-watering 355% in the first half of 2019 does not mean it will replicate that feat in the second half. But the increased attention on the company and ongoing investor optimism bodes well for ZYNE stock as the company enrolls new patients in its clinical studies.