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. Nonetheless, it has been a fair journey over the last few years, with the company now capped at $1.8bn. And the company is close to approval in other jurisdictions.

Neuren (ASX:NEU) share price chart, log scale (Source: TradingView)

But Neuren might not be far away from taking that next step – with an asset all but the most attentive investors may not have heard of before.

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

Neuren listed on the ASX 18 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 guided to US$370-420 for the CY24. This led to A$27m in royalties to Neuren along with A$205m in milestone and upfront payments. The lean licensing model led to an A$157m profit. In the first half of CY24, there were US$161m in sales which would put Neuren slightly behind the lower end of the guidance and the company revised it to US$340-370m. A$24.3m in royalty payments flowed to the company and an $8m profit was made. Progress was also made in the mission to commercialise Daybue outside the USA. Submissions were made in Canada and Europe and answers are expected in the next 6 months. Discussions have been held with Japan’s regulator too. More milestone payments will come the company’s way upon regulatory approval and inaugural commercial sales.

Source: Company

The next big thing: NNZ-2591

Neuren is not just reliant on the success of Trofinetide. It has another asset, NNZ-2591, that is in 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 12 months.

Source: Company

The first of these indications came first and, accordingly, the company is having an End of Phase 2 Meeting with the FDA this month to seek guidance on the remaining program for PMS. In parallel, to these meetings, the company is manufacturing supplies for Phase 3 in PMS, and is conducting preclinical work for other indications.

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

Between July and September, shares in the company lost nearly a third of their value and the company is now trading at A$1.7bn. 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.

By this time next year, the company could be in at least one Phase 3 trial for other indications, and have its product commercialised in Canada and Europe as well as the USA. What an exciting time ahead!

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