FDA Approval Puts Rocket Under Neuren Shares

Small Caps | Mar 16 2023

Amidst a sea of red, the Neuren share price has skyrocketed in recent days following a world first approval for the biotech's treatment of Rett syndrome.

-Nueren share price surged by more than 50% in four days
-Neuren's tronefide becomes first drug to be approved for the treatment of Rett syndrome
-Analysts see a much larger opportunity on the horizon for NNZ-2591 (still in trial phase)

By Danielle Austin

While the ASX coloured red with only the occasional gold company withstanding the global retreat in risk appetite, shares in biotech Neuren Pharmaceuticals ((NEU)) have surged by more than 50% in three days.

Neuren's treatment for Rett syndrome has become the world's first to receive approval from the US Food and Drug Administration (FDA). Neuren is not widely covered, but three stockbrokers explain the importance of last week's announcement.

The FDA, through Neuren’s North American partner Acadia Pharmaceuticals, has granted approval for the use of the treatment in both adult and paediatric patients over the age of two, and with a fast track designation the treatment is expected to be launched in the North American market by the end of April under the branded name Daybue. The treatment is expected to benefit patients through social communication, fine motor skills and breathing. 

Although Neuren will be first to market with a Rett syndrome treatment, other companies continue to investigate experimental treatments for the syndrome, and Acadia has already estimated a sales peak for the treatment of US$500m.

Neuren is a clinical stage drug development company with a focus on developing treatments for disorders of the central nervous system. The company has been consumed by development of its two lead candidate drugs, trofinetide and NNZ-2591. A licensing agreement has been in place between Neuren and Acadia since 2015, following positive clinical efficacy data from trofinetide trials. 

Neuren now stands to receive a US$40m milestone payment following the first commercial sale of trofinetide in North America. Bell Potter expects the drug will contribute $104m even before royalty payments in 2023. The broker (Buy, target price $13.67) points out the company will be eligible for double digit percentage royalties on trofinetide sales, as well as milestone payments equating to as much as US$350m upon reaching four sales thresholds.

The company’s NNZ-2591 drug has also been confirmed for Phase II clinical trials in three of its four targeted indications, these being Pitt Hopkins, Pheland-McDemott and Angelman syndromes. Bell Potter’s valuation on Neuren, reflects not only potential trofinetide milestone payments and royalties, but also the early opportunity in NNZ-2591. 


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