NEU progresses NNZ-2591 towards IND submission
Neuren announced the initiation of preclinical activities for its second compound NNZ-2591, which would allow it to file an IND with the US FDA before initiation of Phase I clinical trials. Initially NEU will focus on optimising manufacturing process for NNZ-2591, the cost of which will be relatively small and take up to a year. This will be followed by the relatively more expensive toxicology studies which are unlikely to start
before 2H15. Additionally, NEU announced encouraging results from two studies in a preclinical model for multiple sclerosis (MS). In brief the results showed that NNZ-2591 could reduce some of the symptoms of MS, in particular neurological impairment (~30% reduction vs. control) caused by the disease, however no conclusions could be drawn on its effect on demyelination which is the underlying cause of the disease.
Our comments
NNZ-2591 is both NEU’s next generation compound as well as back up for its lead product NNZ-2566. The similarity between NNZ-2566 and NNZ-2591 makes us confident that a partner for NNZ-2566 is likely to want NNZ-2591 as well. Initiating IND enabling activities for NNZ-2591 supported by its broad applicability across numerous neurological conditions - as evidenced from various preclinical disease models- will ensure that NNZ-2591 is not thrown in free as part of any deal, but has a value attached to it as well. The burn attached to these activities will be relatively small.
Investment View – Well placed in CNS orphan drug market
Neuren is an attractive orphan drug play and is well placed to benefit from the heightened interest by big and specialty pharma in the space from a licensing and M&A perspective. In our view, NEU shares are poised to re-rate as the company develops and subsequently commercializes its NNZ-2566 product initially in two attractive orphan disease markets, Rett Syndrome and Fragile X Syndrome, with the potential to be useful in a wide variety of autism spectrum disorders. We also expect NNZ-2566’s utility in concussion and moderate-severe TBI to add value to a licensing package. We retain our Buy recommendation and valuation of A$0.19/sh.
NEU Price at posting:
9.5¢ Sentiment: Buy Disclosure: Held
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