BAD NEWS.ZYN002 missing all endpoints in the study shows that the technology for the delivery method is weak
Two other readouts with the same drug ZYN002 that fail to meet endpoints could cause the stock to collapse
Zynerba's Phase 2 Results Indicate A Major Short Opportunity
Aug.10.17 | About: Zynerba Pharmaceuticals (ZYNE)
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Summary
Phase 2 data misses on primary endpoint and all other endpoints in the study
ZYN002 missing all endpoints in the study shows that the technology for the delivery method is weak
Two other readouts with the same drug ZYN002 that fail to meet endpoints could cause the stock to collapse
Financials are sound in the near-term but that doesn't dismiss any future raise a year from now
Another company treating patients with epilepsy that also uses cannabinoid technology achieved positive results with its trial, making it a tough competitor to match
Recently, Zynerba Pharmaceuticals (ZYNE) announced phase 2 results for its cannabidiol gel treating adult epilepsy patients with focal seizures. The company reported that its drug ZYN002 failed to meet the primary endpoint of the study sending shares tumbling by more than 55%. In my opinion, these failed results present a good short opportunity. That is because the company's treatment ZYN002 failed to meet on all endpoints, indicating to me that the technology may not work as well as it should. Why is that substantial? That is because Zynerba is set to report results in the next two months for an osteoarthritis trial, and a fragile x syndrome (rare genetic disease) trial. With the failure of the company's technology in epilepsy patients with focal seizures, I don't see it obtaining positive results in these other indications.
Phase 2 Data
The phase 2 study was known as STAR 1, and it recruited a total of 188 epilepsy patients with focal seizures. The primary endpoint of the study looked at the median percentage change in seizure frequency over the 12 week treatment period, compared to the 8-week baseline period. Patients were randomized into three different groups. The first group received 195 mg of ZYN002 4.2% CBD gel every 12 hours. The second group received 97.5 mg of ZYN002 4.2% CBD gel every 12 hours. The final group received a placebo for treatment. All these treatments were given to these patients over a 12-week period. Patients recruited into the trial were also known to be on an average of 2.5 anti-epileptic drugs. This is where the data gets really bad. Not just because of the miss on the primary endpoint, but the fact that the lower dose of ZYN002 achieved better results than the higher dose. To me that doesn't make any sense at all. Typically, when clinical trials are done with dose escalations the higher dose should always have the better efficacy. In this case, it was quite the opposite and to me that raises a huge issue with the company's technology. Patients that took 195 mg of the gel treatment saw a median reduction in focal seizures of 14%. The lower dose of 97.5 mg achieved an 18.4% median reduction in focal seizures. The placebo achieved a median reduction of 8.7%. The primary endpoint of the study failed as neither dose fared better against placebo. To make matters worse, both doses of the drug were not even statistically significant on the secondary endpoints of the study either.
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