Roth Capital Partners has a Buy rating on Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE) with a $11 price target, noting the potential promise of the company’s cannabidiol (CBD) Zygel which is targeted at four developmental disorders.
Zygel currently is being tested to treat Fragile X Syndrome, Autism Spectrum Disorder and 22q Deletion Syndrome, a disorder caused by a small missing piece of the 22nd chromosome with the release of clinical data expected in the first half of 2020.
Zynerba also plans to meet with the Food and Drug Administration to discuss using Zygel to treat Developmental and Epileptic Encephalopathies, a heterogeneous group of rare epilepsies.
READ: Zynerba Pharmaceuticals wins US patent for treatment of Fragile X syndrome with its Zygel CBD gel
The analyst firm, however, said the odds that the company will advance Zygel are 50% or less, although the Fragile X Syndrome (a rare genetic condition that causes learning disabilities and cognitive impairment) program shows the most promise.
“Near-term, the main risks, in our opinion, include clinical trial uncertainty for three of the four main Zygel indications (note that early-stage data was often open-label which can be less predictive of future results),” wrote Scott Henry in his December 30 note to investors. “Longer-term, the company will need to monetize assets or raise capital to fund future clinical development beyond 2H21.”
But those risks also make Zynerba’s stock a compelling value story, Henry noted.
“Expectations have declined in recent months with shares now trading at (less than) 1/3 of the yearly highs and cash now north of 50% of the market cap. We believe that this presents a more opportune time for an investor entry point. Further, cash is somewhat robust with a runway into 2H21,” he wrote.
The stock of the Devon, Pennsylvania-based company recently traded around $6 a share.
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