What happened

Shares of Zynerba Pharmaceuticals (NASDAQ:ZYNE) gained 356% in the first six months of the year, according to data provided by S&P Global Market Intelligence. The clinical-stage pharmaceutical has emerged from obscurity thanks in part to the craze surrounding everything and anything related to marijuana. 

Its lead and only drug candidate, Zygel, is a cannabidiol (CBD) gel aimed at treating seizures and behavioral symptoms associated with neuropsychiatric disorders including fragile X syndrome and autism spectrum disorder. Despite the surging stock price, the company is valued at just $300 million today. 

An ascending bar chart with the last bar represented by a red arrow on a springboard.

Image source: Getty Images.

So what

Investors appear to be anticipating a few milestones for Zynerba. Results from a phase 3 trial for Zygel in fragile X syndrome are expected before the end of 2019. If the clinical trial achieves success, then a new drug application (NDA) would be filed in the first half of 2020. 

The company also expects phase 2 data from a study evaluating Zygel's potential to treat development and epileptic encephalopathies in Q3 2019. Meanwhile, results from two phase 2 trials evaluating the drug candidate's potential to treat behavioral symptoms in autism spectrum disorder and 22q11.2 deletion syndrome are expected in the first half of 2020.  

Now what

Zynerba exited March with $68 million in cash, and reported an operating loss of $9.5 million in Q1 2019, which suggests it should have enough cash on hand to reach its near-term milestones. Whether or not the clinical trials deliver successful outcomes is another matter, but a relatively lowly market cap of just $300 million suggests Wall Street isn't getting too excited just yet.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.