Neuren Pharmaceuticals (ASX:NEU) Gets FDA Approval- Is It a Buy?

Neuren Pharmaceuticals (ASX: NEU) rose 2.5% yesterday after the US FDA approved DAYBUE STIX, a new powder formulation of its Rett syndrome treatment. The stock has surged 47% over the past year, significantly outperforming the broader ASX, and now trades at a market capitalisation of around AUD 2.55 billion. For investors watching the healthcare space, the question is whether the latest FDA win justifies adding to positions at these elevated levels, or whether much of the good news is already priced in.

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DAYBUE STIX Expands Neuren’s Rett Syndrome Franchise

This approval is more than just a product update. The new powder is dye-free and preservative-free and can be mixed with drinks to improve taste. This matters because patients are more likely to stick with treatment if it’s easier to take. We believe this could support higher patient numbers over time, which directly benefits Neuren’s royalty income.

Here’s what makes this exciting for investors: Neuren earns royalties on every sale of trofinetide, whether it’s DAYBUE or DAYBUE STIX. The momentum is already strong, with Q3 2025 delivering record net sales of US$101.1 million. This suggests demand is building, not slowing.

DAYBUE and DAYBUE STIX remain the only FDA-approved treatments for Rett syndrome. In our view, this monopoly position gives Neuren a strong competitive moat that should protect royalty growth for years to come.

Pipeline Adds Real Upside Potential

Beyond DAYBUE, Neuren’s second drug, NNZ-2591, offers meaningful growth potential. It’s currently in Phase 2 trials for four childhood brain disorders: Phelan-McDermid syndrome, Angelman syndrome, Pitt-Hopkins syndrome, and Prader-Willi syndrome.

Each condition has orphan drug status from both the US and European regulators. This brings valuable benefits, including market exclusivity and reduced regulatory costs. More importantly, the FDA recently granted Fast Track designation for NNZ-2591 in Phelan-McDermid syndrome. This signals that regulators see an urgent need and want to speed things along.

The patient population across these four disorders is estimated at five times larger than Rett syndrome. If NNZ-2591 succeeds in trials, it could multiply Neuren’s revenue base significantly. We believe this pipeline optionality is underappreciated by the market.

The Investor’s Takeaway for Neuren

At an AUD 2.55 billion market cap, Neuren trades at a premium. Analysts have a consensus target of AUD 26.07, suggesting around 27% upside from recent levels near AUD 20.48.

The bullish case rests on three clear drivers: rising royalties from record DAYBUE sales, the launch of a new product in Q1 2026, and a strong pipeline aimed at a larger patient population, all of which could fuel meaningful expansion ahead.

However, investors should consider the risks. Neuren relies heavily on one product through one partner. If Acadia stumbles commercially, Neuren’s royalties take a direct hit. We see this as a moderate risk given DAYBUE’s strong sales momentum and lack of competition. Pipeline success is never guaranteed, either, though Fast Track status and positive Phase 2 results are encouraging signs.

For growth investors comfortable with healthcare volatility, Neuren looks well-positioned at current levels. The combination of monopoly position, record sales, and pipeline upside creates a compelling story. More cautious investors may prefer to wait for a pullback or clearer Phase 3 data before adding exposure.