Ann: Neuren successful in Rett syndrome Phase 2 trial, page-3

Friday humour: A non industry friend text this to me today:

"the FDA says NEU don't have evidence to suggest the drug works which is why the SP fell".

Please see brief exert of my response to him as follows in case anyone else is suffering from the same, incorrect, conclusion:

Not too be rude, but the rejection of Breakthrough does not evenly remotely suggest that.

Only 30% of Breakthrough Therapy Designation ("BTD") application have been granted, this number is closer to 15% for neuro drugs.

NEU traded like a text book case of an small spec stock with a lot of traders betting on it (without much of a clue about the significance of what they were punting on), then wham, negative "FDA result" and panic sets in pushing the share price below the 200 day MA and TA traders drop off too.

In short, fundamentally the story remains as strong as it was when the share price was 15-20 cents.

In November, NEU announced their Phase 2 clinical trial of NNZ-2566 successfully demonstrated clinical benefit in Rett syndrome;
Consequently Neuren was granted Orphan Drug Designation from the FDA;
Analysts Baillieu Holst's and Bell Potter increased their valuation to circa 25 cents with ultra conservative CoS and max market shares; and
Breakthrough was rejected and analysts increased valuations marginally.

Q. Why the increase, if you took a rejection of BTD as a precursor to the FDA thinking that the Rett results were not conclusive?
A. The increase was based on the weakening AUD/USD.
Q. Why didn't they drop their valuations by 50% due to the "FDA rejection".
A. This was based on the fact that most thought that BTD was a 50/50 punt, at best.  That equates to a 50% failure rate. Just 2 non-US, non-big pharma companies have received BTD from the FDA and that the success rate was approx 15% for neuro drugs and BTD's favouring approvals for cancer drugs, etc with big trial numbers

The company still agrees with the significance of the "Ann: Neuren successfyl in Rett syndrome Phase 2 trial" results. Refer to the Chairman's Letter in the recent Annual Report:

"The data we submitted from our Phase 2 trials of 54 subjects was considered to be of insufficient statistical power to meet the FDA's requirement for Breakthrough Therapy at this time.  This does not alter our view of the clinical benefit that was observed in the trial or our commitment to move our Rett syndrome program forward. We and our expert consultants remain confident that we have a strong case for Breakthrough Therapy and we may submit further data to the FDA in the future"

So, in short, the opportunity is massive from this share price as we can buy at pre Rett phase II levels.

Remember, the generally conservative Richard Treagus' recent said "The (Retts phase II) results exceeded our expectations and have led to several enquiries from international pharmaceutical companies" and we are nearly back to the price we were PRE these exceptional results.

Further, I believe a positive result for Retts is a precursor of a positive outcome in any one of Fragile X phase II currently being run.

According to the previous information we know just a 1/3 dose of NNZ 2566 normalised the Fragile X mouse.

According to reports I have heard, the researchers were genuinely surprised because the effects of these compounds were significantly more in Fragile X mice then those in RETT mice.

From Jimmy23's recent posts we know that there is anecdotal evidence on social media similar to what "leaked" prior to the successful Rett trial.

"just like the Rett social media chatter, there is growing anecdotal commentary on the efficacy of the drug (albeit without the confirmation on whether patients are taking the placebo or a 'real' dose). Unfortunately a lot of this chatter is on closed FaceBook groups so I cannot copy and paste the actual commentary. It is however sufficiently exciting for me to buy back into NEU with confidence on upcoming proof of efficacy."

So since RETT data is significant, Neuren is arguably the leading contender of FragileX too.

Rett = $1.6bn market
Fragile X = $7bn market

Opportunity test:

If it looks like an opportunity, swims like an opportunity, and quacks like an opportunity, then it probably is an opportunity. ;-)

Cheers,

Eights.