Neuren Media and Analyst Coverage, page-1448

E & P Commentary

1		3Q24 Result and Voucher Sales | Acadia Pharmaceutical's (NAS:ACAD) solid 3Q24 Result (US.2M; up 35% YoY) assuaged lingering concerns that the sales of trofinetide (DAYBUE) may have already peaked. With improved visibility, ACAD's end of year guidance has tightened to US0M-350M, thus Neuren Pharmaceuticals' (ASX:NEU) CY24 earnings should be ~A8M (at current FX rates), comprised of royalties (~USM) and milestones (USM) payments, as well as a one-third share of the net profits from the rare paediatric disease priority review voucher (recently sold for US0M). World Rett Congress | Direct feedback from clinical and scientific experts at the 9th Annual World Rett Congress was encouraging: a) DAYBUE is demonstrating ongoing efficacy in Rett patients; b) clinical management of side effects is improving; c) real world data is being gathered and packaged in a format that is palatable to non-Rett specialists; d) investigational single administration gene therapies are looking promising with more data coming soon, but still have a number of technical and regulatory challenges ahead. However, despite the bullish outlook at podium and poster sessions, the sentiment from Rett families and non-US specialists was more cautious, expressing hesitation to try DAYBUE due to the perceived burden of daily administration, additional clinical management, and the widely shared news of side effects from US peers. Simultaneously, most Rett families naturally gravitate towards genetic disease modifying treatments — which they describe as the "Cure".

View and Valuation | Our revised valuation is based on detailedfeedback from the World Rett Congress and insights from recent E&Pconferences. Briefly, Acadia's key challenge and opportunity is in buildingawareness, familiarity and confidence for DAYBUE among high volume andcommunity prescribers and the broader Rett community. This process will likelybe slower than initially anticipated requiring high-touch tailored medicalaffairs and outreach. Ultimately, we remain confident that DAYBUE will find itsplace in an evolving therapeutic landscape with peak uptake at ~50% and averagepersistency ~60% in North America. Whilst we have pushed back the Europeanlaunch of trofinetide in line with company commentary, we note that NEU isbuffered from raw ACAD sales fluctuations, and incoming royalty/milestonecashflow looks safe. Simultaneously, NEU is gearing up for a pivotal study ofNNZ-2591 in Phelan-McDermind syndrome, pending FDA alignment on primaryendpoint(s). We have increased our risk-weighted valuation for this programbased on the greater share that NEU would retain in a transaction (we assume75%) should the latter stage development yield a positive outcome. However, wealso reduce our rNPV for other pipeline programs. Taken together, our valuationfalls by 17% to A$19/share, with room for upside catalysts (e.g. confirmationof Phase 3 trials, indication expansions). Maintain Spec Buy.