Zynerba Pharmaceuticals, Inc. (ZYNE) Accused of Misleading Shareholders
According to the class action complaint for alleged violations of the Securities Exchange Act of 1934, in April 2018, Zynerba began Phase 2 of its BELIEVE 1 Trial designed to evaluate the efficacy and safety of Zygel in children and adolescents with developmental and epileptic encephalopathies (“DEE”). On March 11, 2019, Zynerba filed its Annual Report on Form 10-K with the SEC, which reported no adverse events in patients and touted Zygel’s ability to treat patients suffering from DDE due to the “anticonvulsant effects of CBD…shown in multiple in vivo models of epilepsy and clinical trials conducted by third parties.” These representations were then reiterated in a June 2019 investor presentation and in later quarterly reports filed with the SEC. Despite no disclosure of distinct risks or issues with Zygel in these reports, on September 18, 2019, Zynerba issued a press release revealing that 96% of Zygel’s patients experienced a treatment emergent adverse event (“TEAE”), 60% of patients experienced a treatment related adverse event (“TRAE”), and 10 patients reported a serious adverse event (“SAE”). On this news, Zynerba’s stock price fell $2.46, or almost 22%, to close at $8.84 per share and has yet to recover.
