Before the Move: Watch Zynerba ahead of trial data

With Zynerba Pharmaceuticals (ZYNE) expected to release data from a Phase 2 trial over the next several weeks, Jefferies analyst Biren Amin recently argued that a positive update could lead the shares north of $65-$75. However, a lack of treatment effect could drop the stock to $4-$5. CANNABIDIOL GEL: Over the coming weeks, Zynerba is expected to announce data from its ZYN002 cannabidiol, or CBD, gel Phase 2 STAR 1 trial in adult epilepsy patients with refractory focal seizures. ZYN002 is a synthetic CBD formulated as a permeation-enhanced gel for transdermal delivery. BINARY EVENT: In a research note to investors, Jefferies' Amin pointed out that the STAR-1 trial represents a "critical catalyst" for Zynerba as it provides the first proof of concept for transdermally delivered CBD. Given investors naturally compare the program to GW Pharma's (GWPH) Epidiolex, and oral CBD, the analyst believes a better comparison would be to therapies tested in patients with partial-onset seizures who are uncontrolled on their current therapy. Additionally, Amin noted that while the study is designed for a 20% treatment effect over a placebo, an effect greater than 15% could be considered clinically relevant. A key question that remains unanswerable is the extent of activity observed with ZYN002 given this is the first study evaluating efficacy in epilepsy patients, he contended. Amin told investors that positive data could lead to shares north of $65-$75, but a lack of treatment effect could drop shares to $4-$5. The analyst assumes ZYN002 is successfully developed and launched for refractory epilepsy in 2019. Amin reiterated a Buy rating and a $32 price target on the shares. PRICE ACTION: In Monday afternoon trading, shares of Zynerba have dropped 3% to $18.82. Over the last month the stock is up 10%, but over the last three months it has declined nearly 24%. "Before the Move" is The Fly's recurring series of exclusive stories that identify potentially market moving events, along with analyst predictions, ahead of the news.