Ann: Trofinetide successful in Phase 2 trial in Fragile X, page-81

This is a recent comp deal for a company with two trials in a similar stage in the dev pipeline i.e. successful phase 2.. Bell Potter's analyst Tanushree Jain has also suggested this may happen in her updated research report into NEU with the buy rec and target price of A$0.28.

So around 4-weeks ago, Lexicon signed a license deal with Sanofi for their drug targeting Type 1 diabetes.

Under the terms of the agreement Lexicon is receiving an upfront payment for US$300 million.

In addition, Lexicon may receive up to $1.4 billion in milestone payments and if the FDA ultimately approves the drug for either indication then Lexicon is also eligible to receive tiered royalties on net sales.

(Source: http://www.reuters.com/article/us-sanofi-lexicon-idUSKCN0SV0KP20151106#uI8h6uF2A7Hqbb1Q.97)

Below I have also included a market cap comp based . My methodology for that was to look at what Lexicon was priced at prior to the deal and a recent Phase III success for another indication (not included in the Sanofi dea). I considered this was a reasonable assumption l because I believe Neuren and Lexicons end markets ($ wise) to be similar and it is the price Lexicon was prior to any Phase III success.

In August 2015, Lexicon also announced positive top-line results for a pivotal Phase 3 study of telotristat etiprate in patients with carcinoid syndrome.

As mentioned this drug is exempt from the deal with Sanofi I refer to above so the deal is interesting to note given the stage Lexicon was at and the stage Neuren are now at is similar.

From a market cap perspective, Lexicon's market cap prior the the August 2015 phase III/3 success was US$880m or A$1.26bn.  That would equate to approx A$0.75c per share on a fully dilluted basis for Neuren. I believe that Neuren will be at a similar stage to what Lexicon was at prior to August 2015 in approx 6-12 months.

Needless to say, the deal with Sanofi has increased Lexicon's market cap and analysts are valuing the company closer to US$2bn or A$2.8bn post deal and Phase III success so that highlights both the low case and potential valuation post deal and/or a single phase III success (remember 65% for phase III/3 compared to 18% for Phase II/2 recently -- so we're at the stage insto's and big pharma start taking interest!).

End market $ size FXS, Retts and ASD would be around the equivalent of Lexicon's end markets or much higher because of the high price tag for Retts and FXS drugs.

Here is hoping the analyst, broker and big pharma road shows build awareness over the coming weeks and move Neuren closer to a fair valuation or better still a deal.  I note the Morgans analyst returned from a trip on Friday and he sounded genuinely surprised with the price (so low following such significant results) so I wouldn't be surprised to see some more comp buying at the 10-12 range this week.

Have a good weekend all -

8's