Media News, page-43

Beg your pardon, it was the E&P analyst. In his latest update 3 Feb 2023 he stated he had reduced his likelihood of NDA approval from 95% to 85% due to "concerns around the validity of the RSBQ co-primary endpoint". And he moved from a previously Buy recommendation to Neutral due to the "risk profile of the binary catalyst" of the approval.

Two problems with the above. Firstly, the RBSQ was already agreed by FDA, and met. The idea the FDA is going to change the goalposts after the fact doesn't make any sense - I am pretty sure that is not the way things are done. Furthermore, as a bit of research quickly showed, there was no suggestion by anyone the RBSQ wasn't valid - the E&P guy seems to have caught the same internet meme others briefly caught.

This is not just my opinion. Tanushree Jain of Petra Capital responded "I understand a broker who went from a Buy to a Hold on the stock recently may have provided the rationale for doing that due to questions around the validity of RSBQ as an endpoint for rett. I do not view this as a risk or a reason for the FDA to not approve trofinetide. The fact that the RSBQ measure is not perfect is well known for years but this is what you have at this present time to measure the benefit of a drug for rett and FDA agrees to that and therefore allowed NEU/Acadia to run the Phase 3 trial with that as an endpoint. I also note that in the NEU trial that was a co-primary endpoint with CGI-I and NEU had to pass both with statistical significance to have a positive trial for the FDA which they did. Also more importantly, just last night on the Anavex's call that company mentioned that with the FDA input they are going to use RSBQ and CGI-I as their endpoints for their Phase 2/3 rett trial which has just completed enrolment. I note that Anavex has been trying to get a modified AUC endpoint on RSBQ and CGI-I agreed from the FDA which they used in their previous Phase 2 trial. FDA has obviously knocked that back and told them to use what Acadia did. If there was any doubts around RSBQ and CGI-I for that matter as a valid endpoint from FDA's perspective, this should help to put those to rest."

So the reason he gave for reducing approval from 95% to 85% was not sound.

Secondly, its true there is a binary decision coming up that can go either way. But this binary decision was already coming 9 months ago when he rated it Neuren a Buy. He could make lots of arguments for adjusting his recommendation - but the one he gave does not make sense. He even admitted that his calculated valuation was still the same.

Both of the above changes felt more like kneejerk reactions to me than well thought out reasoning. I suspect he was getting the jitters like the rest of us coming close to approval and scared clients would blame him if his predictions didn't materialize. Mind you, this sort of illogical reasoning isn't uncommon in analysts reports. I remember the Bell Potter analyst who, after strong Ph 3 results, downgraded the approval likelihood to well below the average approval rate because... well - no reason was given for the seemingly random number they changed it to.

All this said, the E&P guys analysis is still some the most thorough out there.