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UPDATE 1-Zynerba's cannabis-based epilepsy gel fails study, shares plunge

(Adds details, background, shares)

Aug 7 (Reuters) - Zynerba Pharmaceuticals Inc said on Monday its synthetic cannabis-based gel to treat epilepsy failed a mid-stage study, sending the U.S. drug developer's shares plunging 50 percent.

In the study, two doses of Zynerba's gel also its lead experimental drug were tested in adults suffering from epilepsy with partial seizures, those that occur when epileptic activity takes part in a localized part of the brain.

Neither dose induced a statistically significant improvement in seizure frequency, when compared to a placebo.

Data from studies evaluating the gel's use in osteoarthritis patients and in children with Fragile X Syndrome, a genetic condition, is expected later this year.

Zynerba's gel contains a synthetically processed formulation of cannabidiol (CBD), a non-psychoactive component of the cannabis plant.

Although many U.S. states have sanctioned the medical or recreational use of cannabis, drugs derived from the plant could take longer than usual to hit the market.

Under U.S. federal law, marijuana is a Schedule 1 drug - a dangerous substance with no medicinal value, making additional approvals for marijuana-derived treatments necessary.

Zynerba believes that a chemical-pharmaceutical process it uses to replicate CBD in its drug will help meet "stringent regulatory" and manufacturing requirements.

The company said it was still evaluating study data to determine next steps.

Britain's GW Pharmaceuticals considered a pioneer in cannabis-drug development, is expected to file a U.S. marketing application for its CBD-based epilepsy drug later this year.

Shares of Devon, Pennsylvania-based Zynerba were down 49 percent at $7.70 in premarket trading on Monday. (Reporting by Natalie Grover in Bengaluru; Editing by Martina D'Couto and Sai Sachin Ravikumar)