Share Price, page-610

I have reread the licensing contract that Neuren signed with Acadia in August 2018, particularly focusing on what is says about

(a) Acadia’s Fragile X development obligations and
(b) what happens in the event of another party seeking to acquire Neuren.

(a) For trofinetide in Fragile X, a Joint Steering Committee was to be set up to consider further development. It was stated in the contract that any further development of trofinetide in Fragile X would need to include a Phase 2 study to assess “Proof of Concept”. Were a decision made to conduct a Phase 2 POC study, Acadia agreed to fund the study up to a limit (which was not disclosed) with Neuren liable for any costs beyond that.

From my reading of the contract, Acadia does not appear to have made any specific warranty that it will undertake further development of trofinetide in Fragile X.

While failure to this point to further develop trofinetide in Fragile X could simply be the result of Acadia’s desire to spread out its R & D costs or to reduce risk by waiting until after Rett Phase 3 results were in, there is also the possibility that this has been a calculated move by Acadia, with the aim of limiting the value of trofinetide at this point. I would expect that in any takeover negotiations, Acadia would attempt to limit valuation of trofinetide to Rett syndrome alone, arguing that Proof of Concept was yet to be established in Fragile X.


(b) Prior to Neuren initiating any sale process or transaction, it must notify Acadia and allow Acadia to participate in the process on the same terms as applicable to all other participants.

In the event that Neuren is acquired by another company, the Joint Steering Committee is to be terminated and all decisions about any further development of trofinetide for the US market would be made by Acadia alone. Consequently, were another company seeking to acquire Neuren, it is unlikely that they will want to factor into the valuation any potential milestone payments or royalties from Acadia with respect to trofinetide in Fragile X.

While Neuren is continuing to talk up the potential US$455m in milestones + royalties for trofinetide line, the fact is that it is now over 6 years since Phase 2 results in Fragile X were released and over 3 years since the trofinetide licensing deal with Acadia was announced.

When asked about plans for trofinetide in Fragile X in a recent conference call, Steve Davis simply stated that the company’s focus at this time was on advancing the Rett program.

However, if Acadia was successful in acquiring Neuren, my expectation is that the Fragile X development program would suddenly be resuscitated.