What Zynerba's Flop Means For CBD Therapies And GW Pharmaceuticals

Shares of Zynerba Pharmaceuticals Inc ZYNE lost more than 58 percent of their value Monday morning after the company reported disappointing results from its phase 2 STAR 1 clinical trial for its adult epilepsy treatment.

Zynerba is one of the largest cannabinoid-focused pharmaceutical companies in the world, and had been developing transdermal synthetic cannabinoid treatments for a few years now. However, in what has been considered a major setback, the phase 2 STAR 1 clinical trial for its CBD gel, ZYN002, aimed at the treatment of adult patients suffering from epilepsy with focal seizures, failed to meet its primary endpoint of driving a statistically significant reduction in seizures.

Despite the failure, CEO Armando Anido said in a press release that the company is “continuing to evaluate this study and the ongoing STAR 2 open label study to determine next steps with ZYN002 in adult epilepsy patients with focal seizures.” He also pointed out that the study demonstrated the treatment has a “very favorable safety and tolerability profile, which is an encouraging fact” as the company looks to develop ZYN002 as a treatment for numerous other indications.

What Does It Mean For The Sector?

Interested in what these results mean for both Zynerba and its top competitor, GW Pharmaceuticals PLC- ADR GWPH, Benzinga reached out to Alan Brochstein, author of the 420 Investor.

Zynerba’s failure is not about CBD and its therapeutic potential, as it might seem at a first glance, Brochstein explained. All this means is that the company’s transdermal delivery method is not effective.

GW Pharmaceuticals, on the other hand, gained more than 2 percent in Monday’s pre-market trading. And, while the stock might fall in sympathy over the shorter term, “this is actually positive news about less potential competition in the treatment of epilepsy,” Brochstein added.

“The safety data, not surprisingly, was positive,” he concluded.

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