- 1) Synthetic manufacturing
- 2) Transdermal technology
Although this may sound “counterintuitive,” the firm emphasizes that Zynerba “is not nearly as ‘early stage’ as it might seem.” Even though the company currently has only two products, ZYN001 (prodrug of THC in a patch) and ZYN002 (CBD in a gel), the price target established only takes ZYN002 into consideration.
Investment ThesisDavis and Liu pointed out four elements that are central to their investment thesis:
- 1) Differentiation: Unlike oral liquids, which present several limitations, transdermal delivery “avoids first pass metabolism for higher bioavailability and more consistent plasma levels,” the report explained. The mechanism may also be safer, and cheaper, since “synthetic manufacturing (instead of plant derived API) has higher gross margins and an easier CMC regulatory path.”
- 2) De-risked Science: The medical benefits of both CBD and THC are now widely accepted in the scientific community. Hence, Canaccord expects ZYN002's Phase 1 trial in mid-2016 to prove the product is “very approvable, safe, and de-risked.”
- 3) ZYN002 And Epilepsy: ZYN002 could reach $500 million in sales for refractory epilepsy.
- 4) Safety, pK: “Preclinical data shows good safety and pK.”