Zynerba Pharmaceuticals Reports First Quarter 2022 Financial Results and Operational Highlights

• Enrollment continues in RECONNECT, a confirmatory pivotal Phase 3 trial of Zygel in patients with Fragile X syndrome (FXS); topline results expected second-half 2023
• Topline results from Phase 2 trial of Zygel in patients with 22q11.2 deletion syndrome (22q) expected mid-year 2022
• $69.7 million in cash and cash equivalents at March 31, 2022; Cash runway into second-half 2023

Zynerba Pharmaceuticals, Inc. (Nasdaq: ZYNE), the leader in innovative pharmaceutically-produced transdermal cannabinoid therapies for rare and near-rare neuropsychiatric disorders, today reported financial results for the first quarter ended March 31, 2022, and provided an overview of recent operational highlights and a pipeline update.

“We are excited by the opportunities ahead for Zygel in FXS and other rare and near-rare neuropsychiatric indications, and have made meaningful progress since the beginning of this year,” said Armando Anido, Chairman and Chief Executive Officer of Zynerba. “Specifically, during the first quarter of 2022, we continued to enroll patients in our Phase 3 pivotal trial in patients with FXS, completed enrollment in our Phase 2 trial in patients with 22q11.2 deletion syndrome and advanced toward submission of an Investigational New Drug application for a Phase 3 trial in patients with ASD that we expect to initiate in the second half of 2022.”

Operational Highlights and Pipeline Update

Zygel in Fragile X Syndrome (FXS)

• The Company continues to expect topline results from RECONNECT, a confirmatory pivotal Phase 3 trial of Zygel in patients with FXS, in the second half of 2023. The Company believes that the results from RECONNECT, if positive, will be sufficient to support the submission of a New Drug Application (NDA) for Zygel in patients with FXS.
• During the first quarter of 2022, Zynerba received orphan drug designation for cannabidiol, the active ingredient in Zygel, for the treatment of FXS from the European Commission. As previously announced, the Company believes, based on the scientific advice of the European Medicines Agency, that the successful completion of the current development program for Zygel in FXS will satisfy the requirements of a marketing authorization application in the European Union.
• Presented data at the 2022 Society of Biological Psychiatry (SOBP) Annual Meeting in April and the 2022 International Society for Autism Research (INSAR) Annual Meeting in May demonstrating that in the long-term safety and efficacy study of Zygel in children and adolescents with FXS, improvement was seen in Social Avoidance in the full population, with the greatest improvement in patients with complete methylation of the FMR1 gene. Patients with complete methylation, who match the primary efficacy population in the ongoing confirmatory trial, RECONNECT, achieved and maintained meaningful change in Social Avoidance, supporting design enhancements for RECONNECT. (Poster and Presentation)

Zygel in 22q11.2 Deletion Syndrome (22q)

• In the first quarter of 2022, the Company completed enrollment for the 14-week open-label Phase 2 INSPIRE trial in children and adolescents with genetically confirmed 22q. The Company continues to expect topline data from INSPIRE mid-year 2022. A total of 20 patients have been enrolled in the INSPIRE trial.
• The Company plans to move forward in 22q as an orphan indication pending results from the INSPIRE trial, and subsequent discussion with the U.S. Food and Drug Administration (FDA) on the regulatory path forward. The Company has previously received orphan drug designation from the FDA for cannabidiol, the active ingredient in Zygel, for the treatment of 22q.

Zygel in Autism Spectrum Disorder (ASD)

• The Company is finalizing the Phase 3 study protocol and will submit an Investigational New Drug application to the FDA prior to commencing the pivotal program. The Company expects to initiate the first of two Phase 3 trials in patients with ASD in the second half of 2022.
• As previously announced, earlier discussions with the FDA included agreement on utilizing the irritability subscale of the Aberrant Behavior Checklist – Community (ABC-C) as the primary endpoint to support an indication for the treatment of irritability in ASD. This is the same primary endpoint utilized in the pivotal trials for the two existing FDA approved treatments for ASD.

First Quarter 2022 Financial Results
Research and development expenses were $5.1 million for the first quarter of 2022, including stock-based compensation of $0.5 million. General and administrative expenses were $3.8 million in the first quarter of 2022, including stock-based compensation expense of $0.6 million. Net loss for the first quarter of 2022 was $8.5 million, with basic and diluted loss per share of $(0.21).

Financial Outlook
As of March 31, 2022, cash and cash equivalents were $69.7 million, compared to $67.8 million as of December 31, 2021. On May 11, 2021, the Company entered into a Controlled Equity Offering^SM Sales Agreement, or the 2021 Sales Agreement”, with Cantor Fitzgerald & Co., Canaccord Genuity, LLC, H.C. Wainwright & Co. LLC and Ladenburg Thalmann & Co. Inc., as sales agents, pursuant to which the Company may sell, from time to time, up to $75.0 million of its common stock. In the first quarter of 2022, the Company sold and issued 857,060 shares of its common stock under the 2021 Sales Agreement in the open market resulting in gross proceeds of $1.8 million and net proceeds of $1.6 million, after deducting commissions and offering expenses. From April 1, 2022 through May 13, 2022, the Company sold and issued 297,362 shares of its common stock under the 2021 Sales Agreement in the open market resulting in gross proceeds and net proceeds of $0.6 million, after deducting commissions and offering expenses.

During the three months ended March 31, 2022, the Company received a payment of $8.0 million from the Australian Tax Office for research and development incentives for the years ended December 31, 2018, 2019 and 2020.

Management believes that the Company’s cash and cash equivalents are sufficient to fund operations and capital requirements into the second half of 2023.

About Zygel
Zygel is the first and only pharmaceutically-manufactured cannabidiol formulated as a patent-protected permeation-enhanced clear gel, designed to provide controlled drug delivery into the bloodstream transdermally (i.e. through the skin). Recent studies suggest that cannabidiol may modulate the endocannabinoid system and improve certain behavioral symptoms associated with neuropsychiatric conditions. Zygel is an investigational drug product in development for the potential treatment of behavioral symptoms associated with Fragile X syndrome (FXS), autism spectrum disorder (ASD), and 22q11.2 deletion syndrome (22q). The Company has received orphan drug designation for cannabidiol, the active ingredient in Zygel, from the FDA and the European Commission in the treatment of FXS and by the FDA for the treatment of 22q. Additionally, Zygel has been designated a Fast Track development program for treatment of behavioral symptoms of FXS.

About Zynerba Pharmaceuticals, Inc.
Zynerba Pharmaceuticals is the leader in innovative pharmaceutically-produced transdermal cannabinoid therapies for rare and near-rare neuropsychiatric disorders. We are committed to improving the lives of patients and their families living with severe, chronic health conditions including Fragile X syndrome, autism spectrum disorder, and 22q11.2 deletion syndrome.