Ann: Q2 2024 update, page-30

E & P Commentary:

Impact to NEU

• ACAD is trading down ~11% in the aftermarket
• Consensus will likely downgrade NEU’s full year royalty earnings by ~10%
• It is important to note that NEU are only exposed to 10% of the impact of ACAD’s sales of DAYBUE
• And NEU will still be eligible for the US$50M (~A$77M) milestone payment (assuming DAYBUE crosses $250M of net sales in 2024; which is still very likely)
• Total FY24 revenue from licensing for NEU is still estimated at ~A$135M, with the potential for another ~US$33M should ACAD sell their paediatric rare disease priority review voucher (RPDPRV)
• As such the estimated reduction on overall full year revenue for NEU (vs E&P estimates), is only ~4.5% (excluding RPDPRV)
• Therefore, if the market reacts negatively to NEU by more than ~5% to today’s news from ACAD, and given the thesis around DAYBUE and NNZ-2591 remains solid (see more details below), a buying opportunity may emerge.

ACAD Earnings and Guidance

• 2Q24 DAYBUE net product sales is a 6% miss to VA consensus (US$89.7M) and a 4% miss vs E&Pf (US$88.4M).
• The FY earnings downgrade is ~10% vs prior guidance at the midpoint, but the new range is 40% tighter – suggesting greater confidence
• Management gave mixed feedback about currently tracking towards the lower end of guidance, but with the aim of reaching the upper end should their HCP and caregiver education and support initiatives play out as anticipated
• The reason for the change in guidance is due to slower new patient starts than expected.
• 11% sequential growth in DAYBUE sales comes from 7% patient volumes and 4% price increase.

Patient Numbers are Flat

• Total patients using DAYBUE has increased since May (862; which was after a down period) to 900 on the 1^st August 2024. But is flat versus the end of 2023.
• Patient numbers are 20% below E&Pf, and is attributed to a slower rate of new starts – particularly in the high volume and community neurology practices (which account for 65% of Rett patients)
• 30% of all registered Rett patients in the US have initiated treatment, leaving 70% still addressable, and this number will grow with improved diagnostics and awareness

Underlying Metrics Look Positive

• Trends in: new patient additions (12% higher weekly rate); discontinuations (46% lower weekly rate); Net patient adds (900 patients at Aug 1 vs 862 on May 3^rd), are all heading in the right direction
• Importantly, the 900 current patients are recipients of enhanced care protocols, leveraging the progress made in GI management.
• The more recently added patients are more likely than the equivalent 900 patients (at the end of Dec’23) to remain on the drug past the first 2-4 weeks, and are therefore more likely to experience positive impact of the treatment.
• >80% of payers have written policies in place with ~90% conversion to paid over time. This suggests that the level of evidence provided by the company and doctors is satisfying payers as to the level of health economic value provided by the drug
• Market research has shown that 92% of healthcare providers (HCPs) are aware of DAYBUE, all 100% are covered by ACAD salesforce, and 30% have initiated treatment. Doctors surveyed have stated an intent to treat with DAYBUE for >70% of eligible patients (vs respondents’ current level of ~40%) – suggesting further increases in uptake will come through in the coming months
• Persistency is continuing to track ~10pp higher than the open label extension (LILAC-1) with real world persistency at 9 months at 58%. This remains in line with our forecast for long term persistency at ~50%.

Supportive Long Term and Real-World Data

• Poster and paper publications are supportive of long-term efficacy consistent with trial experience.
• Importantly, real-world improvements in clinical management are manifesting with more manageable gasto-intestinal side-effects
• These data now being available in formats that are digestible to HCPs, payers, and caregivers will help ACAD’s team to disseminate and spread awareness and education

Gross to Net

• ACAD took a small price increase midway through Q2 (4% of the 11% in sequential growth)
• Overall compliance to dose remains at ~75% in line with our original assunmptions
• Product consumption rate across the entire population is in the low 70% range

International Expansion of DAYBUE

• Canada: Aiming for approval around year-end 2024
• Europe: Expecing a Marketing Authorisation Application (MAA) filing in Q1 2025
• Japan: Will require a small study involving Japanese patients, discussion are ongoing

NNZ-2591

• ACAD are proceding with pipeline developmet of ACP-2591 (formerly NNZ-2591) in Rett and Fragile X.
• It is conceivable that an ACAD’s Rett study could occur outside the US, to avoid cannibalisation of DAYBUE. We view Australia as a good option in this regard and have comunicated this to ACAD managemnet
• NEU are awaiting top line result from their Phase 2 study of NNZ-2591 in Angelman Syndrome (N.B. This is now expected in the coming days)
• NEU also have an end of Phase 2 meeting for Phelan-McDermid syndrome with the FDA scheduled for Sept’2024, which will also be informative of their Pitt Hopkins program.
• Placebo controlled studies of NNZ-2591 would help to build value and confidence, with a Phase 3 in Phelan-McDermid most likley in the first instance.