AFR write up (article) (2 hours ago)

ASX NEU: FDA drug approval lifts biotech Neuren to $1b valuation (copyright link)

FDA drug approval lifts biotech Neuren to $1b valuation

Tom RichardsonMarkets reporter and commentator

Biotech Neuren Pharmaceuticals surged to a $1 billion valuation on Monday after the US healthcare regulator, the Food & Drug Administration, approved its trofinetide drug for the treatment of neurological disorder Rett syndrome in early childhood.

Neuren CEO Jon Pilcher said he’s delighted for the Rett syndrome community. Eamon Gallagher

Neuren is eligible to receive ongoing royalties on annual sales from its US distribution partner, Acadia, and up to $US350 million ($525.5 million) in milestone payments if sales targets of more than $US1 billion are met in a single year.

Acadia will license Neuren’s trofinetide drug under the commercial name DAYBUE, with the Australian biotech on the brink of a $US40 million upfront payment on the first commercial sales of the drug, after snaring $US10 million on the successful trial results.

A single course of DAYBUE is expected to cost more than $US125,000, with Neuren eligible to receive 10 per cent of all sales up to $US250 million per year.

“This is a transforming milestone that places us in a position to make the most of the opportunities ahead of us, as we work with the communities to make a difference in four other neurodevelopmental disorders,” said chief executive Jon Pilcher.

Wilsons also said the cash inflows for Neuren from DAYBUE on a 100 per cent gross margin will help fund the ongoing clinical trials for new drug development.

Neuren retains the rights to trofinetide outside the US under the terms of its agreement with Acadia. It’s currently conducting phase 2 trials for its second drug candidate, NNZ-2591, for each of Phelan McDermid syndrome, Angelman syndrome, Pitt Hopkins syndrome and Prader-Willi syndrome.

Over 2022, the biotech made a net profit of $0.2 million on revenue of $14.6 million as a result of its license agreement with Acadia.

It first reported the stunning results for trofinetide in December 2021, when it said a phase three trial of 187 patients using trofinetide met both its primary endpoints by a statistically significant basis, versus the placebo group.

Wilsons stuck to its overweight rating and $11.24 share price target on the shares, versus Monday’s closing price of $9.09 after it jumped 18.5 per cent.

Rett syndrome harms the brain causing a progressive loss of motor skills and speech from as young as six months old. The syndrome presents differently in each person.

Hashan De Silva, head of healthcare research at Karst Peak Capital, was one of the stock’s largest early institutional investors.

Neuren started out developing therapies for traumatic brain injury sufferers in conjunction with the US Army. The business made a critical pivot in 2012, switching its focus to the treatment of neurodevelopmental diseases and relocating its headquarters to Melbourne.