Neuren Media and Analyst Coverage, page-1200

The main point I was trying to make wasn't so much that Cerevel is a good valuation comparison for Neuren, but rather that you don't have to have an approved drug on the market to have a high valuation.

There have been many comments from posters (and analysts) suggesting NNZ-2591 is still valued low because it's not yet approved.

It’s patently silly to say that a company can’t have a high valuation unless it has an approved drug on the market.

Another example of a pre-approval biotech being acquired for a high valuation was Karuna Therapeutics, which was acquired by BMS for US$14 bn a year prior to Cerevel’s US$8.7 bn acquisition by AbbVie.

Karuna’s drugs were in similar indications to Cerevel’s but its lead drug, while not yet approved, had already succeeded in a registrational trial and was already under regulatory review with the FDA.

Comparing what was paid for Karuna (US$14 bn) versus what was paid for Cerevel (US$8.7 bn), one might argue that having successful pivotal trial results in hand seems to add a big chunk to valuations.

The way I see it, although it is possible for decent valuations to be achieved prior to market approval of the lead asset, substantially higher valuations can be achieved by a company where the target asset has already succeeded in a pivotal trial.

The US$7.3 bn paid for Reata Pharmaceuticals’ orphan drug asset doubtlessly reflected the certainty and near-term revenues that comes with having an already-approved drug.

I’d also point out that, despite the lofty prices paid for Reata, Cerevel and Karuna, all were acquired for a share price premium of less than 100%.