The FDA will hold a public hearing on potential regulatory pathways for cannabis products on May 31
Zynerba (ZYNE) is on the rise for a second straight session on Wednesday after the Food and Drug Administration issued a statement yesterday on new steps to advance the agency’s continued evaluation of potential regulatory pathways for cannabis-containing and cannabis-derived products. Commenting on the FDA news, Ladenburg analyst Michael Higgins said he believes the agency will be taking further steps in 2019 to remove any non-prescription products being sold that include tetrahydrocannabinol and cannabidiol, which he views as favoring the market adoption of Zynerba’s Zygel.
POTENTIAL REGULATORY PATHWAYS: The FDA issued a statement yesterday from outgoing Commissioner Scott Gottlieb on new steps to advance the agency’s continued evaluation of potential regulatory pathways for cannabis-containing and cannabis-derived products, in which he stated in part: “In recent years, we’ve seen a growing interest in the development of therapies and other FDA-regulated consumer products derived from cannabis and its components, including cannabidiol, or CBD…We also recognize that stakeholders are looking to the FDA for clarity on how our authorities apply to such products, what pathways are available to market such products lawfully under these authorities, and how the FDA is carrying out its responsibility to protect public health and safety with respect to such products.” The FDA is announcing a number of new steps and actions to advance its consideration of a framework for the lawful marketing of appropriate cannabis and cannabis-derived products under its existing authorities, Gottlieb said. These new steps include: A public hearing on May 31, as well as a broader opportunity for written public comment, for stakeholders to share their experiences and challenges with these products, including information and views related to product safety; The formation of a high-level internal agency working group to explore potential pathways for dietary supplements and/or conventional foods containing CBD to be lawfully marketed; including a consideration of what statutory or regulatory changes might be needed and what the impact of such marketing would be on the public health; Updates to its webpage with answers to frequently asked questions on this topic to help members of the public understand how the FDA’s requirements apply to these products; and the issuance of multiple warning letters to companies marketing CBD products with “egregious and unfounded claims that are aimed at vulnerable populations.”
ANALYST SEES NEWS FAVORING ZYNERBA: In a research note to investors yesterday, Ladenburg’s Higgins said he believes the FDA will be taking further steps in 2019 to remove any non-prescription products being sold that include THC and CBD, while allowing the production and marketing of hemp as it follows the Agriculture Improvement Act of 2018. He sees the removal of current CBD-containing foods, lotions, snacks, oils and other embodiments containing CBD favoring the market adoption of Zynerba’s Zygel. The analyst noted that he has “long expected” the availability of over the counter CBD products during Zygel’s marketing – assuming positive pivotal data in Fragile X patients in the second half of 2019 and approval in the second half of 2020 – but the stance of the agency suggests less availability of CBD-containing products for consumers to choose from. Further, Higgins believes FDA’s publication reflects the agency’s “loss of patience” with these products as the number of and marketing of these products have become “more ubiquitous and aggressive.” Additionally, the analyst thinks the agency may provide and/or reinforce its position against the allowance of marijuana-based products as food or dietary products in its May 31 hearing. He reiterated a Buy rating and $26 price target on Zynerba shares.
OTHERS TO WATCH: Other publicly traded companies in the cannabis space include Aphria (APHA), Aurora Cannabis (ACB), CV Sciences (CVSI), CannTrust Holdings (CNTTF), Canopy Growth (CGC), Cronos Group (CRON), General Cannabis (CANN), India Globalization Capital (IGC), MediPharm Labs (MLCPF) and Tilray (TLRY).
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