Shares of Zynerba Pharmaceuticals (NASDAQ:ZYNE) are surging Tuesday after the company landed a patent for the treatment of autism spectrum disorder. Specifically, the patent covers treatment using cannabidiol, which will surely add a spark to ZYNE stock.
The stock was up 8% in pre-market trading and there’s potential for this name to run even further once investors catch wind of it. We’re seeing that play out now, with shares up 18% in Tuesday morning trading.
With a market capitalization just under $250 million, it’s not a well-known player like Biogen (NASDAQ:BIIB) or Celgene (NASDAQ:CELG). In the same light, it’s not even a well-known cannabis stock, like Canopy Growth (NYSE:CGC) or Aurora Cannabis (NYSE:ACB).
Zynerba was issued U.S. Patent No. 10,314,792, which is titled, “Treatment of Autism Spectrum Disorder with Cannabidiol” and runs through 2038. So if the treatment is successful, ZYNE stock will have the rights to this treatment for almost two decades.
Zynerba is building out a portfolio of different treatments based around its potential cannabidiol product Zygel. I say “potential” because there’s still a lot of work and progress needed before this becomes a staple in the medicine cabinet, so to say.
The patented treatment “includes claims directed to methods of treating autism spectrum disorder by administering a therapeutically effective amount of synthetic cannabidiol.” It was granted during the enrollment period of a Phase 2 BRIGHT study, which is intended to evaluate “the safety, tolerability and efficacy of Zygel for the treatment of children and adolescents with Autism Spectrum Disorder.”
Will it work? At this stage it’s impossible to say, but there is promise. GW Pharmaceuticals (NASDAQ:GWPH) has successfully gained traction — even here in the U.S. — with its cannabidiol treatment for epileptic seizures. So if Zynerba can show similar successes with its treatment, it may open the door to other possible treatments in the future using its Zygel product.
Trading ZYNE Stock
Click to Enlarge The big boost in ZYNE stock comes as little surprise. After all, it’s got all the right buzzwords working in its favor, even if the company has good intentions. Wall Street latches to these trends and investors aren’t afraid to jump on board if they think there’s opportunity. That’s even as Phase-2 testing has yet to begin.
ZYNE stock chart is one of only a few that could make a double-digit gain look fairly modest. Above you can see how it moved over downtrend resistance (blue line) on Monday. Now it’s pushing through $13, as well as the 20-day moving average.
Can this thing ignite through $14 and tag its 2019 high near $16.50? Yes, it can. There’s no guarantee that it will, but these sort of momentum boosters can give a huge shot in the arm to small-cap stocks.
Whether that justifies a move this powerful, ZYNE stock investors certainly have a reason to be excited. But there’s a lot of room on the upside before Zynerba stock exhausts itself.
On the downside, I want to see $11 to $11.50 hold as support.
This marks the 50-day moving average (which is trending higher) as well as the 38.2% retracement. That said, it would be highly discouraging to see ZYNE stock lose all of Tuesday’s gains.
Bottom Line on ZYNE Stock
North of $13 and the 20-day would be best, but let’s see how it trades throughout the day and the rest of this week.