Share Price, page-260

Now is not the time to sell the company, in my opinion.

According to Evans Partners, success in Phase 3 has increased trofinetide in Rett’s likelihood of approval (LOA) from 65% to 90% (?) thereby increasing Neuren’s mc valuation by A$290m.

According to Bell Potter, success in Phase 3 has raised the LOA from 60% to 85%, thereby increasing Neuren’s mc valuation by A$315m.

It’s certainly nice to see analyst consensus that, on the back of trofinetide’s Phase 3 results, Neuren this week is worth much more than last week. But, if we are now talking about potential sale of the company, I think that much more focus should be on the potential impact on company valuation of success in the NNZ-2591 Phase 2 trials.

Currently, analysts value NEU’s post-Phase 1 NNZ-2591 assets using the assumption of a 25% LOA. Post-Phase 2 success, the assumed LOA would move to 60-65%.

Now, take into account the fact that company estimates of the value of the potential market for the NNZ-2591 assets across the four current indications is more than 5 times that of the Rett syndrome market.

So, if trofinetide in Rett syndrome transitioning from post-Phase 2 to post-Phase 3 (with an increase in LOA of 25%) means that analysts have added ~ A$300m to Neuren’s valuation, then what would NNZ-2591 transitioning from post-Phase 1 to post-Phase 2 (with an increase in LOA of 35-40%), in indications with a target market >5 x, add to Neuren’s valuation? A$2bn?

Therefore, Phase 2 success of NNZ-2591 across its four indications would dramatically move the needle on Neuren’s valuation. It then becomes a question of what level of confidence one has in NNZ-2591 succeeding in its Phase 2 trials and whether one is willing to wait, perhaps, 18 months to reach that point.

From my point of view, both the risk and the wait would be worth it.