Neuren (ASX:NEU) Crashes 10% on EU Setback: Is This a Buying Opportunity?

Neuren Pharmaceuticals: Is the 10% drop a buy signal?

Neuren Pharmaceuticals (ASX: NEU) dropped nearly 10% on Tuesday, falling to A$14.63 from a previous close of A$16.25. The sell-off came after the European Medicines Agency’s Committee for Medicinal Products for Human Use (CHMP) issued a negative trend vote on trofinetide, the company’s Rett syndrome treatment sold as Daybue in the US. For investors, the big question now is whether this setback is a serious blow to Neuren’s growth story or a chance to buy a quality biotech at a discount.

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What’s Actually at Stake

The European market matters for Neuren, but let’s put this in context. Under its licence agreement with partner Acadia Pharmaceuticals, Neuren stands to receive US$35 million when the first European sale happens, plus additional milestone payments totalling up to US$170 million as sales grow. On top of that, Neuren would earn royalties of 15-22% on all European sales.

Here’s the important part: this is a delay, not a final rejection. The CHMP will formally adopt its decision in February. If that decision remains negative, Acadia has confirmed it will request a re-examination, which is standard practice for complex drug applications. CEO Jon Pilcher called the vote “frustrating” but supports pushing forward with the appeal process.

What makes this less scary is that Neuren is already making money without Europe. The company posted a profit of A$142 million in 2024, driven entirely by US and Canadian sales. Daybue achieved US$348.4 million in US sales last year, up 97% from 2023. With roughly A$359 million in cash on the balance sheet, Neuren has plenty of runway regardless of what happens in Europe.

Why Every Analyst Says Buy

Despite the recent drop, analyst sentiment remains firmly bullish. All nine analysts covering Neuren rate the stock a “Buy” with an average price target of around A$25. That implies roughly 70% upside from current levels.

The investment case rests on three things. First, US sales still have plenty of room to grow since 80% of diagnosed Rett syndrome patients haven’t tried Daybue yet. Second, Acadia expects global Daybue sales to reach US$700 million by 2028, which would significantly boost Neuren’s royalty income. Third, the company’s second drug, NNZ-2591, targets four childhood brain disorders affecting a patient population five times larger than Rett syndrome. Phase 2 trials have already shown positive results in three of these conditions.

The Investor’s Takeaway

We believe the selloff looks overdone if the re-examination succeeds. Yes, the European delay is disappointing. But it doesn’t change the core story: Neuren is a profitable biotech with strong US momentum, a rock-solid balance sheet, and a promising pipeline that most investors are undervaluing.

The main risk is outright EU rejection, which would eliminate the US$170 million milestone opportunity and delay access to 9,000-12,000 European Rett patients. But until February’s final decision, this remains a delay scenario rather than a permanent setback.

For investors comfortable with some uncertainty, current prices may offer an attractive entry point into a high-quality healthcare name. More cautious investors might prefer to wait for the February decision before committing new capital. Either way, with unanimous analyst buy ratings and the US business firing on all cylinders, this looks like a speed bump rather than a reversal of Neuren’s long-term growth trajectory.