In a statement issued Monday, the cannabis biotech company Zynerba Pharmaceuticals, Inc. (NASDAQ:ZYNE) reported a fourth-quarter loss of “$8.1 million with basic and diluted net loss per share of $.60.” In the previous two years, the company "delivered a $32 million loss for 2017 versus a $23 million loss for 2016”.
Research Costs, Results May Pay
Continuous losses like this may raise eyebrows for potential investors. However, this is normal for biotech companies due to product research and development phases. Zynerba is no exception.
The company began its statement outlining its commitment to “developing and commercializing innovative pharmaceutically-produced transdermal cannabinoid treatments for rare and near-rare neurological and psychiatric disorders with high unmet medical needs.”
Currently, the company is in research and developmental phases with two products, so the majority of their resources are allocated to these areas which are exactly why this type of financial loss is common.
Investments made now in companies focused on research can yield significant benefits for investors in the long run. Green Market Report reported that companies focused on development expect that “revenues will come later if the studies prove to work and their products prove effective.”
While Zynerba has yet to produce revenue in the last three years, they are still well funded. According to the company they have "the cash and cash equivalent position of $62.5 million as of December 31, 2017, and this type of funding will be able to support "operations and capital requirements well into 2019".
Focused on the Drug Study
Zynerba is currently evaluating or conducting studies on ZYN002 and ZYN001.
ZYN002 is a CBD oil for Developmental and Epileptic Encephalopathies (DEE) which is “a category of rare and ultra-rare, severe brain disorders manifesting with seizures or EEG abnormalities that can directly worsen cognition or behavior” as per a company statement. ZYN002 also addresses conditions including Fragile X syndrome and epilepsy.
Zynerba’s Chairman and Chief Executive Officer, Armando Anido, expressed the company’s progress with favorable results from its study for the management of disorders that ZYN002 is designed to treat in a statement.
“We enter 2018 with strong momentum including having completed a positive meeting with the FDA to discuss our clinical path for ZYN002 in Fragile X syndrome. We have a refined development and commercialization strategy focused on rare and near-rare neuropsychiatric conditions, and the expectation of achieving numerous milestones in the coming year including initiations of the pivotal Fragile X syndrome study and Phase 2 studies in developmental and epileptic encephalopathies, adult refractory focal seizures, and Tourette Syndrome.”
The company also issued a brief update on Phase 1 of their program assessment of ZYN001 which is a “patent-protected, pro-drug of THC delivered via a patch.” ZYN001 was developed to treat patients with” neuropsychiatric disorders including Tourette Syndrome” according to the company’s website.
An evaluation on ZYN001 is currently being executed and should be completed in the first half of 2018. Clinical trials on Tourette Syndrome are slated to begin the second half of 2018.