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Catalysts growing like weeds for Zynerba?

May 10, 2017

Despite confirming third-quarter catalysts and progress throughout its development pipeline, Zynerba Pharmaceuticals Inc ZYNE’s first-quarter financial report didn’t impress investors. The company conceded an 8.3-percent stock decline Tuesday even as it boasts a 22-percent year-over-year increase in earnings per share.

Cantor Fitzgerald wasn’t shaken, though.

In fact, analysts Elemer Piros and Justin Kim rate the company Overweight with a one-year price target of $28.

Justification For Bullish Stance

The valuation is based largely on one of three Phase 2 studies for ZYN002, a synthetic cannabidiol (CBD) gel for neurological conditions. Trial data will be released in the third quarter for treatment of adult focal seizures.

“We believe the validation of oral CBD in well controlled placebo-controlled pediatric epilepsies provides significant positive read-through for ZYN002,” Piros and Kim wrote in a Tuesday note.

The treatment’s other two indications, osteoarthritis and Fragile X syndrome, were not included in the pricing model and could thus yield additional upside with successful results.

Zynerba also has a catalyst in ZYN001, a transdermal tetrahydrocannabinol patch for fibromyalgia and peripheral neuropathic pain, which will begin Phase 1 studies for fibromyalgia in the second quarter. Positive results are expected to precipitate Phase 2 studies in the second half of the fiscal year.

Risks to the Cantor Fitzgerald thesis include failure in clinical trials, regulatory intervention, industry competition and financing issues.

Zynerba shares were trading down 8.76 percent at $18.02 at time of publication.

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