Four years ago this month, Dr. Richard Treagus announced that...

Four years ago this month, Dr. Richard Treagus announced that NEU’s approximate 2 billion shares would be consolidated “in order to remove an impediment to investment for some US institutions”. A subsequent 1 for 20 consolidation in November 2017 reduced NEU shares on issue to approximately 102 million. Immediately pre-consolidation, NEU’s share price was $0.14c (equivalent to $2.80 post-consolidation), its market cap was ~$280m and institutions were said to hold 14% of the company.

Institutional investment now stands at 30%. Much of this is attributable to Karst Peak Capital acquiring 14 million shares from major shareholder, Lang Walker, @ $1 per share and a placement of 14 million shares to various institutions @ $1.40 per share. With international institutional investment increased, Neuren’s share price is now $1.25 (equivalent to $0.06 pre-consolidation) and its market cap is $148m.

In summary, since the consolidation, institutional ownership in the company has been boosted by 16%, acquired at an average price of $1.20 per share, NEU's share price has halved and the market cap has decreased by $132m (47%).

As can be seen below, the company's market value decline in no way reflects progress otherwise made since late 2017.

Trofinetide

• Neuren executed a North American licensing deal for trofinetide worth a potential US$465m in milestones as well as double digit royalties. The licensee, Acadia Pharmaceuticals has full financial responsibility for Phase 3 clinical development and registration (~US$100m). (August 2018)
• Phase 2 trofinetide trial results published in peer-reviewed journal, Neurology. (March 2019)
• Phase 3 trial of trofinetide in ~180 Rett syndrome patients commenced (Oct 2019). This trial is on track for release of top line results by the end of this year.
• Rare Paediatric Disease Designation granted for trofinetide in Rett syndrome by FDA (March 2020)
• Trofinetide patents granted in Japan (April 2018), Israel (May 2020) and Canada (April 2021)

NNZ-2591

• Positive animal model results announced for NNZ-2591 in Phelan-McDermid syndrome (Feb 2019)
• Positive animal model results announced for NNZ-2591 in Pitt Hopkins and Angelman syndromes (May 2019)
• Positive 6 week dosing results announced for NNZ-2591 in animal model (March 2020)
• Phase 1 commenced for NNZ 2591 in Phelan McDermid, Pitt Hopkins and Angelman syndromes (May 2020)
• Success in Phase 1 announced (Feb 2021)
• Manufacture completed for Phase 2 of NNZ-2591 in in Phelan McDermid, Pitt Hopkins and Angelman syndromes (March 2021)
• Successful pre-IND meeting with FDA for planned Phase 2 trials of NNZ-2591 in Phelan McDermid, Pitt Hopkins and Angelman syndromes (June 2021)
• US Orphan Disease designation granted for NNZ- 2591 in Phelan McDermid, Pitt Hopkins and Angelman syndromes (Oct 2019)
• EU Orphan Disease designation granted for NNZ- 2591 in Phelan McDermid, Pitt Hopkins and Angelman syndromes (Jan 2021)
• NNZ-2591 in Prader-Willi syndrome added to pipeline after successful pre-clinical (Feb 2021)
• NNZ-2591 patents granted in Japan (August 2019) and Europe (Dec 2019)

Corporate

• $20 million raised from institutional investors to fund NEU’s NNZ-2591 Phase 2 clinical trials

It’s interesting to compare the market performance of NEU since late 2017 with two other listed Australian biotechs, PYC and IMU.

At the time of NEU’s consolidation, PYC had a share price of ~ $0.035, market cap of $74m and approximately 2.1 bn shares on issue. Now, PYC has almost 3.2bn shares on issue, a share price of ~ $0.18 and market cap of ~$600m.

At the time of NEU’s consolidation, IMU had a share price of $0.02, market cap of $48m and approximately 2.4bn shares on issue. Now, IMU has almost 5bn shares on issue, a share price of ~ $0.40 and market cap of ~$2bn.

This begs the question, how has NEU's consolidation, and its attendant reduced liquidity, worked to benefit its ordinary shareholders?