Oppenheimer Makes Drastic Price Target Cut for Zynerba Pharmaceuticals Inc Following Epilepsy Drug Setback


Upon releasing negative data for lead drug candidate transdermal CBD (ZYN002) on Monday, Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE) investors ran for the hills, sending the stock plunging by nearly 56%. The drug, which is designed to treat patients suffering from focal seizures in adult epilepsy, flopped during its STAR-1 trial, missing the mark on both primary and secondary endpoints.

Analyst Derek Archila­ of Oppenheimer sees the trial as “disappointing” in regard to treating epilepsy, but still, does not rule out the drug due to its potential to treat knee osteoarthritis.  Archila is thus maintaining an Outperform rating on ZYNE stock, while significantly lowering his price target from $29 to $8 representing a 28% rise above current trading levels. (To watch Archila’s record, click here)

The analyst explains: “At this point, we remove ZYN002’s contribution for epilepsy (~$21/share) from our valuation and shift our focus to ZYN002’s potential in knee osteoarthritis (OA) and FXS. We expect top-line results for both these indications later in August and September, respectively. There is no significant read through from ZYN002’s epilepsy results in knee OA and FXS from a mechanistic standpoint, though we suspect investors will remain skeptical about whether ZYN002 can achieve therapeutic levels of CBD given today’s failure.”

While noting that management is looking for a way forward on the epilepsy front, the analyst opines, “We don’t believe today’s results put to rest whether ZYN002 can achieve therapeutic levels of CBD and will likely continue to make investors cautious on the upcoming readouts.” However, this comes along with a cautionary note. “We expect lack of correlation between ZYN002’s efficacy and plasma levels in STAR-1 will leave investors perplexed until there is further data available,” says Archila.

TipRanks analytics demonstrate ZYNE as a Buy. Out of 8 analysts polled by TipRanks in the last 3 months, 4 are bullish, while 4 remain sidelined on Zynerba stock. With an upside potential of nearly 182%, the stock’s consensus target price stands at $17.57.