If you’re looking to invest in marijuana, you should know that there are three specific types of marijuana stocks on the market – manufacturer stocks, equipment stocks, and biotech stocks. The stock that we are going to be looking at today belongs to the biotech category.
Zynerba Pharmaceuticals (NASDAQ:$ZYNE) is similar to other marijuana-focused biotechs in the sense that it doesn’t develop the drug from marijuana plants. Instead the company develops medications that use synthetic cannabinoids. Regardless of whether you’re looking to add Zynerba to your marijuana stock list or are just interested in what the company has to offer, here are five things you need to know about the company.
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Zynerba’s Pipeline Has Two Products
Right now, the lead candidate is ZYN002. This is a synthetic form of cannabidiol (CBD) that’s delivered through a transdermal gel. For those new to the sector, cannabidiol is a non-psychoactive chemical found in cannabis oil. Currently, ZYN002 is in three phase 2 clinical studies for treatment of epilepsy in adults with fragile X syndrome, osteoarthritis, and focal seizures.
On the other side of the equation, ZYN001 is a pro-drug form of THC, which is the primary psychoactive chemical in marijuana. Until converted to an active drug within the body, pro-drugs are considered to be inactive. ZYN001 is delivered into the body through a transdermal patch. As we speak, Zynerba is analyzing ZYN001 in two phase 1 clinical studies for treating peripheral neuropathic pain and fibromyalgia.
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Zynerba Has an Advanced Management Team
Luckily for Zynerba, the CEO of the company has a 30-year track record in the biopharmaceutical sector. Before joining Zynerba in 2014, Anido was the CEO of NuPathe as well as the CEO of Auxilium Pharmaceuticals, which was later acquired by Endo International (NASDAQ:$ENDP). Since joining Zynerba, Anido has filled the company’s executive team with others from NuPathe and Auxilium.
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Vast Amount of Opportunities
All of the diseases and conditions that Zynerba’s pipeline candidates target have unmet medical needs. In regards to the potential market size for ZYN002, osteoarthritis is the biggest with an estimated 31 million patients. Adult epilepsy with focal seizures follow behind with roughly 1.5 million U.S. patients.
According to Elemer Piros, an analyst for Cantor Fitzgerald, Zynerba’s ZYN002 drug could produce peak annual sales of $2 billion if approved for the epilepsy indication in both the United States and Europe. Additionally, being delivered through a transdermal patch helps to avoid metabolism by the liver and could give the drug a significant advantage.
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Rivals
Like most things, Zynerba has its fair share of rivals. Right now, there are two primary competitors developing cannabinoids: GW Pharmaceuticals (NASDAQ:$GWPH) and Insys Therapeutics (NASDAQ:$INSY).
To start, GW Pharmaceuticals has completed numerous late-stage studies for its CBD candidate, Epidiolex, in treating two rare forms of childhood epilepsy. Additionally, GW is looking at another cannabinoid in a phase 2 study for treating epilepsy with focal seizures.
Second, Insys Therapeutics is working on a CBD product for treating pediatric epilepsy as well. That said, the company has yet to announce any plans to target the same indications that Zynerba is focusing on.
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Risk Factor
To no surprise, Zynerba’s primary risks are those shared by all clinical-stage biotechs. Essentially, when a clinical study doesn’t go as well as expected, the stock will take a significant beating. Additionally, it’s a long and winding road to regulatory approval. Regardless of whether Zynerba wins approval for its lead candidate, it could still face competition.
To see Zynerba’s risks, look at its stock performance. In 2017, Zynerba’s share price has gone through six swings of 20% or more. If all goes well for its pipeline products, there is great potential for the company, just don’t forget that there are risks involved.
Featured Image: twitter
