DEVON, PA — Zynerba Pharmaceuticals, Inc. (Nasdaq: ZYNE) reported financial results for the first quarter ended March 31, 2023, and provided an overview of recent operational highlights and a pipeline update.
“The first quarter of 2023 was a period of continued focus and execution on our two lead programs with Zygel,” said Armando Anido, Chairman and Chief Executive Officer of Zynerba. “During the quarter we continued to enroll patients in our confirmatory pivotal Phase 3 RECONNECT trial as we are committed to bringing the first pharmaceutical product indicated for the treatment of behavioral symptoms of Fragile X syndrome to market. In addition, we expect continued dialogue with the U.S. Food and Drug Administration (FDA) in 2023 regarding an acceptable trial design for our Phase 3 program in patients with 22q deletion syndrome, with the goal of finalizing a trial design by the end of 2023.”
Operational Highlights and Pipeline Update
Zygel in Fragile X Syndrome (FXS)
- The Company expects topline results from RECONNECT, a confirmatory pivotal Phase 3 trial of Zygel in patients with FXS, in the first half of 2024. The Company believes that the results from RECONNECT, if positive, will be sufficient to support the submission of a New Drug Application (NDA) in the U.S. and a Marketing Authorization Application (MAA) in Europe for Zygel in patients with FXS.
- The Company presented data at the 55th Gatlinburg Conference in April 2023 demonstrating that in the ongoing long-term safety and efficacy trial of Zygel in children and adolescents with FXS, Zygel was well-tolerated with long-term administration with up to 45 months of exposure. Patients with complete methylation, who match the primary efficacy population in the ongoing confirmatory trial, RECONNECT, achieved and maintained clinically meaningful changes in Social Avoidance over 24 months, further supporting this design enhancement for RECONNECT. (Press Release)
Zygel in 22q11.2 Deletion Syndrome (22q)
- As previously disclosed, based on the positive Phase 2 INSPIRE trial data announced in June 2022 (Press Release), the Company held an initial meeting with the FDA in the fourth quarter of 2022 to obtain feedback on the Phase 2 data and regulatory pathway for Zygel in patients with 22q. The Company expects to continue its productive dialogue with the FDA on this topic and arrive at an acceptable trial design by the end of 2023. The Company currently plans to initiate a Phase 3 program in children and adolescents with 22q following topline results from RECONNECT.
- The Company presented data at the 55th Gatlinburg Conference in April 2023 that showed through 38-weeks of treatment, statistically significant improvements were seen in children and adolescents treated with Zygel in the Pediatric Anxiety Rating Scale (PARS-R), all five scales of the Anxiety, Depression and Mood Scale (ADAMS), and all five subscales of the Aberrant Behavior Checklist – Community (ABC-C). These results are consistent with the previously reported 14-week treatment data suggesting a positive risk-benefit profile for Zygel in improving anxiety-related and other behavioral symptoms in children and adolescents with 22q when added to standard of care. (Press Release).
Corporate – Reverse Stock Split
- Zynerba intends to seek approval of a reverse stock split at its Annual Meeting of Stockholders in June (Annual Meeting), which it would effect any time prior to November 1, 2023. Details of the reverse stock split are included in the Company’s Proxy Statement for the Annual Meeting. The primary objective of implementing a reverse split is to satisfy the minimum bid price requirement for continued listing on the Nasdaq Capital Market. The Company’s Board believes that effecting the reverse split would increase the price of the Company’s common stock which would, among other things, help the Company to:
- Meet certain continued listing requirements of the Nasdaq Capital Market;
- Appeal to a broader range of investors to generate interest in the Company; and
- Improve perception of the Company’s common stock as an investment security.
Stockholders of record are encouraged to review the proxy materials filed with the SEC before voting. If stockholders have any questions or need assistance with processing their vote, please contact MacKenzie Partners, Inc. (email: proxy@mackenziepartners.com, or call toll free: 1-800-322-2885), Zynerba’s proxy solicitor.
First Quarter 2023 Financial Results
Research and development expenses were $7.1 million for the first quarter of 2023, including stock-based compensation of $0.4 million. General and administrative expenses were $3.4 million in the first quarter of 2023, including stock-based compensation expense of $0.4 million. Net loss for the first quarter of 2023 was $10.1 million, with basic and diluted loss per share of $(0.21).
Financial Outlook
As of March 31, 2023, cash and cash equivalents were $44.4 million, compared to $50.6 million as of December 31, 2022.
On May 11, 2021, the Company entered into a Controlled Equity OfferingSM Sales Agreement (2021 Sales Agreement), with Cantor Fitzgerald & Co., Canaccord Genuity, LLC, H.C. Wainwright & Co. LLC and Ladenburg Thalmann & Co. Inc., as sales agents, pursuant to which the Company may sell, from time to time, up to $75.0 million of its common stock. The Company is currently subject to General Instruction I.B.6 of Form S-3, and the amount of funds its can raise through primary public offerings of securities in any twelve-month period using its existing registration statement on Form S-3 is limited to one-third of the aggregate market value of the voting and non-voting common equity held by non-affiliates. The Company will be subject by this limit until such time as its public float exceeds $75.0 million. In the first quarter of 2023, the Company sold and issued 1,179,077 shares of its common stock under the 2021 Sales Agreement in the open market resulting in gross proceeds of $0.7 million and net proceeds of $0.6 million, after deducting commissions and offering expenses.
On July 21, 2022, the Company entered into a Purchase Agreement (2022 Purchase Agreement) and registration rights agreement for up to $20.0 million with Lincoln Park Capital Fund, LLC (LPC), a Chicago-based institutional investor. In the first quarter of 2023, the Company sold and issued 2,100,000 shares of its common stock under the 2022 Purchase Agreement resulting in gross and net proceeds of $1.1 million. From April 1, 2023 through May 11, 2023, the Company sold and issued 150,000 shares of common stock under the Purchase Agreement resulting in gross and net proceeds of $0.1 million.
Management believes that the Company’s cash and cash equivalents are sufficient to fund operations and capital requirements to mid-year 2024. Top-line results from the Company’s confirmatory pivotal Phase 3 RECONNECT trial of Zygel in patients with FXS are expected in the first half of 2024.
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