Analyst Upgrades Zynerba, Encouraged By Prospects For Fragile X Phase 2 Study

Zynerba Pharmaceuticals Inc (NASDAQ: ZYNE) investors may have reason for cautious optimism after the company’s recent Fragile X Syndrome treatment data. On Monday, Cantor Fitzgerald analyst Elemer Piros upgraded Zynerba to Overweight and said there is a reasonable change ZYN002 will find commercial success as a treatment for Fragile X.

According to Piros, Cantor Fitzgerald sees a 30 percent probability of ZYN002 making it to the Fragile X market (see his track record here). However, even with less than a one in three chance of success, the Fragile X data has created some major value potential in Zynerba stock.

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“Based on the positive Phase 2 FXS results, we are encouraged by the potential for ZYN002 to treat the disease and have assessed the risk-adjusted opportunity for the drug,” Elemer said.

“With an annual price assumption of $45,000 (U.S.) and $32,000 (EU), ZYN002 could reach combined peak sales of $1.5 billion, in our calculation.”

For now, the firm is waiting for additional data and information from the company related to potential fundraising. Elemer expects Zynerba will secure additional financing within the next one to two years and will begin a phase II/III study in early 2018. Cantor Fitzgerald estimates Zynerba will finish 2018 with roughly $73 million in cash on its balance sheet.

Elemer said ZYN002’s potential Fragile X indication adds roughly $13 per share of risk-adjusted value to Zyberba. Cantor Fitzgerald has raised its price target for the stock accordingly, from $4 to $17.

Zynerba’s stock initially jumped 52 percent last week on the news but remain down more than 40 percent year to date.

At time of publication, shares of Zynerba were up 3.91 percent at $8.69.

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