Zynerba Analyst Says Stock A Buy Ahead Of Zygel Data Release In 2020

Zynerba Pharmaceuticals Inc ZYNE shares ended Monday's session nearly 15% higher after Canaccord Genuity said the stock's mid-September sell-off was unjustified. 

The Analyst

Sumant Kulkarni maintained a Buy rating on Zynerba with an $18 price target.

The Thesis

The Phase 2 data for Zygel released in mid-September was misunderstood, especially as it relates to safety, Kulkarni said in a Monday note. (See his track record here.) 

The analyst issued the report following an investor event Canaccord hosted with the principal investigator in New Zealand for the BELIEVE 1 study. 

Kulkarni named the following takeaways from the meeting: 

• Zygel was very well-tolerated, with adverse events over a six-month trial period in the fragile target population being common and expected.
• Transdermal administration is attractive with more benign side effects than other products. 
• If Zygel were to be approved, the principal investigator said she would readily prescribe it to her patients.

Zynerba expects to meet with the FDA in the first half of 2020 to discuss the data from the study as a means to inform a potential pivotal program in developmental and epileptic encephalopathies, the analyst said. 

Kulkarni said he's awaiting updates on the the path forward for Zygel in DEE and said he believes data from the pivotal CONNECT-FX study in Fragile X syndrome due in the first half of 2020, is the key stock catalyst, as FXS has no currently approved products.

The company is also due to release open-label Phase 2 data for Zygel in autism spectrum disorder and 22q11.2 deletion syndrome, also in the first half of 2020, the analyst said. 

The stock presents an opportunity ahead of the release of FXS data in the first half of 2020, according to Canaccord Genuity. 

Zynerba Price Action

The stock was 13.49% higher at $6.48 at the close Monday. 

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