Neuren Pharmaceuticals (ASX:NEU): Another exciting chapter is yet to come with NNZ-2591

Neuren Pharmaceuticals (ASX:NEU) is an ASX biotech company that has had a stellar past few years, but it is now facing the question: ‘Where to now?’ Companies with just one asset targeting one indication in just one jurisdiction can only go so far, and that is the step Neuren is at with Trofinetide.

Its true that it has been a fair journey over the last few years, with the company now capped at $1.7bn. And the journey with Trofinetide is only just getting started – the company is close to entering other markets with that asset.

But there’s a reason why Neuren has seen momentum in recent days, and it hasn’t got anything to do with Trofinetide. It is another asset belonging to the company that could be even more of a money spinner.

Neuren Pharmaceuticals (ASX:NEU): So far so good!

Neuren listed on the ASX over 20 years ago, in January 2005. Although it has been trying to develop Trofinetide (also known as NNZ-2566) ever since, it was in 2018 when things really got moving. It signed a deal with San Diego-based company Acadia Pharmaceuticals, giving Arcadia the North American rights to Trofinetide in the event of commercialisation. In return, Acadia agreed to fund a phase III trial for Rett Syndrome and commercialisation costs if and when it entered the market.

Rett syndrome is a rare brain disorder that leads to severe impediments, such as a loss of motor skills and language. Rett syndrome becomes apparent after 6-18 months of age and almost exclusively impacts females. There are currently no FDA-approved medicines for this disease.

The Arcadia-funded Phase III trial was a complete success, meeting the primary endpoints on a statistically significant basis. After the trial was concluded in late 2021, Neuren and Acadia made their case to the FDA and the green light was given in March 2023.

Trofinetide, known as Daybue for commercialisation purposes, thus became the only approved treatment for Rett Syndrome. It also gave Neuren a Rare Pediatric Disease Priority Review Voucher (PRV) as well as US$40m a month later when the first sale was made, along with royalties on net sales and one third of the market value of the PRV.

In CY23, Daybue made US$177.2m in sales, and followed this up with US$348.4m in CY24. This led to over A$85m in royalties (A$27m in CY23 and A$56.2m in CY24) to Neuren along with A$205m in milestone and upfront payments in CY23 and a further A$80.5m in CY24 from achieving US$250m+ in sales, plus A$76.5m from Neuren’s one third of net proceeds from the sale of its PRV. Neuren made an A$156.9m profit in 2023 and a $145.6m profit in 2024.

For CY25, Arcadia has guided to US$380-405m in the US alone, which would lead to A$62-67m in royalties. With Canadian sales due to start in Q3 of 2025, the global sales figure could be higher. European approval is expected in Q1 of 2026. Plus, there could be even more milestone payments to come, the most likely next one will be US$50m for exceeding US$500m in sales.

The next big thing: NNZ-2591

Neuren is not just reliant on the success of Trofinetide. It has another asset, NNZ-2591, that has undergone multiple clinical trials for multiple neurological diseases that are larger than the market for Rett syndrome. These include Pheland McDermind Syndrome, Angelman syndrome and Pitt Hopkins syndrome. The company has obtained top-line Phase 2 results for all three in the last 24 months.

The first of these indications came first and, accordingly, the company sought a Phase 3 trial there first. Phelan-McDermid Syndrome is a rare genetic brain disorder that causes developmental and speech delays, behavioural problems and a weakened or no ability to feel pain or sweat. There are no medications, drugs or therapies for PMS, thus representing a big need. It is estimated that between 1 in 8,000 and 1 in 15,000 have PMS.

Earlier this week, the company confirmed the primary endpoints for a Phase 3 trial of NNZ-2591 in PMS. In other words, it knows which targets it will need to set in order to deem the trial a success and is now nearly able to proceed, although the FDA still needs to review the final protocol.

It will be the change in baseline in the Receptive Communication sub-domain of the Vineland Adaptive Behaviour Scales and the overall score in the Pherlan-McDermid Syndrome Assessment of Change. The trial will run over 13 weeks, start in the middle of the year and run in children aged 3 to 12 years. This trial will be the first ever to be run in PMS which is why the FDA has taken its time to give approval to conduct a trial.

A brief dip, but set to shoot for the skies once again

Although shares have rallied in recent days, the company is now trading at A$1.4bn which is just over half of where it was 12 months ago. Beyond the general market turmoil right now, we think this is down to the company’s sales slowing. Even so, the company trades significant cheaper than Telix which is over A$7bn despite having a smaller pipeline so far as other indications are concerned.

But by this time next year, the company will have NNZ-2591 in a Phase 3 trial have its product commercialised in Canada and Europe as well as the USA. What an exciting time ahead!

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