Sell-Side Analysts See Upside Potential In Zynerba

Zynerba Pharmaceuticals Inc ZYNE have dropped by about 12 percent since the company reported third-quarter results Nov. 8.

Analysts at HC Wainwright and Canaccord Genuity consider the sell-off an overreaction and issued positive updates on the company this week. 

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The Analysts

HC Wainwright's Oren Livnat reiterated a Buy rating on Zynerba with a $23 price target. 

Canaccord Genuity's Arlinda Lee maintained a Buy rating with a $15 price target. 

The Thesis

Zynerba's ZYN002 is a CBD-based drug for children and adolescents with Fragile X syndrome, a genetic condition that causes intellectual disability, behavioral and learning challenges and is thought to be a single-gene cause of autism spectrum disorder.

In its last earnings report, Zynerba reiterated all "expected pipeline timelines," said HC Wainwright's Livnat.

The company is showing financial discipline and is well-capitalized to survive through 2019, the analyst said. 

The sell-side firm's model focuses solely on the ZYN002 candidate, and Livnat estimates an enterprise value of $34 million.

HC Wainwright's price target of $23 per share, which implies an upside of around 300 percent, includes a probability of success for ZYN002 of 35 percent of achieving $700 million in peak U.S. sales with an orphan indication, the analyst said. 

Canaccord's Lee said Zynerba's earnings report reflects a lower-than-expected rate of cash burn. Zynerba has enough cash to last through through the important data for ZYN002's ongoing Phase 3 trials next year, the analyst said. 

The Price Action

Zynerba Pharmaceuticals shares were down 3.36 percent at $5.47 at the time of publication Tuesday. 

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