Is Cannabis Biotech Zynerba the Hottest Post-IPO of 2015?

Zynerba Pharmaceuticals sold 3 million shares of common stock at $14.00 per share in its IPO last week. All 450,000 shares in the overallotment option were used, and the pricing range had been $13.00 to $15.00 per share.

Jefferies and Piper Jaffray were the joint book-running managers for this offering. Canaccord Genuity and Oppenheimer were listed as co-managers for the IPO.

Here is what matters, after pricing at $14.00 the first day’s highest price was shown to be $22.25 – but the closing price was $16.25. Then shares closed at $19.32 on Thursday, followed by $24.54 on Friday.

So what are investors supposed to think when shares are up 58% more on Monday at $38.95. The reality is that the float here was tiny from the start and volume remains light still.

Zynerba describes itself as a specialty pharmaceutical company focused on developing and commercializing proprietary next-generation synthetic cannabinoid therapeutics formulated for transdermal delivery. The company even said:

Zynerba is evaluating two product candidates, ZYN002 and ZYN001, in five indications. ZYN002, the company’s CBD Gel, is the first and only synthetic CBD formulated as a patent protected permeation-enhanced gel and is being studied in refractory epilepsy, Fragile X syndrome and osteoarthritis. Zynerba is also developing ZYN001, which utilizes a synthetically manufactured pro-drug of THC in a transdermal patch to deliver THC through the skin and into the bloodstream. ZYN001 will be studied in fibromyalgia and peripheral neuropathic pain.

The 58% gain to $39.00 now gives Zynerba a market cap, based upon an outstanding share count of 8,733,963 shares from the prospectus, of just under $350 million.

The company’s capital raised was $48.3 million before commissions and fees. The SEC filing showed the following patent and intellectual property information:

Our intellectual property related to ZYN002 and ZYN001 was internally developed. Our ZYN002 patent portfolio currently consists of two issued patents in the United States, five issued patents in France, Germany, Ireland, Switzerland and the United Kingdom and two pending patent applications in Canada and Japan. The issued patents will expire between 2026 and 2029, and any patents that issue from our currently pending patent applications will expire in 2030. Our ZYN001 patent portfolio currently consists of two issued patents in the United States, one issued patent in Japan, one allowed patent in Europe and patent applications pending in the United States, Europe, Canada and Japan. The issued patents will expire between 2028 and 2031, and any patents that issue from our currently pending patent applications will expire in 2028.

It is not all that normal to see an IPO open more or less in-line with its pricing only to run up massively higher after the actual IPO release.

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