Barrenjoey report
DAYBUE out of the doldrums
we maintain our OW rating on Neuren, upgrading our PT to $30.80 (prev $29.30). FY24 has been a monumental year for NEU on the basis of progress with NNZ-2591 in the clinic (2 positive Phase II trial readouts) now awaiting entry into its first registrational Phase III trial (April update anticipated). And on the commercial front, DAYBUE has exceeded expectations to end the year (4Q24 sales US$96.7m +5% B*e, +3% cons), continuing to provide a stable and reliable revenue stream to fund the NNZ-2591 pipeline development. 2025’s outlook for DAYBUE drives modest upgrades, with new ACAD management cautious, yet optimistic, on their ability to grow new patient referrals 10% yoy (ahead of B*e).
We assess upside risk to a 2H guidance upgrade. Overall, we hope investors can view the solidarity in DAYBUE performance and outlook as a key NEU relief point, noting the revenue reliability likely gets better from here as the enduring patient base grows, with NNZ-2591 progress as icing on the cake.Topline pre-announced; reflects a monumental yearNo surprises in terms of the topline result with DAYBUE sales and outlook reported by licensee ACAD yesterday.
NEU have continued to deliver with both sides of the business exceeding expectations in FY24; whether it be DAYBUE in the US market reaching US$348m, reflecting only ~30% of the Rett population having tried DAYBUE, cementing their first US$50m sales milestone, with geographic expansion within the next 12 months. Or NNZ-2591, in the form of two stellar Phase II trial readouts in Pitt Hopkins and Angelman syndromes supporting Dec ‘23 data in Phelan McDermid syndrome (PMS) that will see NEU enter the first ever registrational Phase III trial in this indication ~mid CY25.DAYBUE FY25 outlook above B* expectationsCognisant of this being the first time the new ACAD management team have guided DAYBUE sales, we anticipated them erring on the conservative side.
Assumptions underlying their DAYBUE sales guidance (US$380-405m) infer upside risk to positive revision in our view, noting this assumes 50bps net pricing appreciation in spite of higher GTN (B*e within guidance range) and 10% new patient referral volume growth on FY24 (FY24 added ~800pts to cumul. DAYBUE exposed pool).NNZ-2591 updates imminentWe expect several updates on the NNZ-2591 front in 1H25. Notably, confirmation of the registrational primary efficacy endpoint/s for the Phase III PMS trial, with an early April Type C FDA meeting scheduled, after which we expect confirmation of final trial design aspects.
In addition, a new fifth indication is to be announced, with a commensurate Phase II program in this indication expected to begin soon after. This would represent a further leverage and expansion opportunity for NEU’s 2nd generation IGF-1 asset, adding to our already sizeable TAM (B*e ~US$3.4b) for NNZ-2591 across the three neurodevelopmental disorders in active clinical development.Bullish investment view remains; modest 5% PT liftWe make minimal changes to our forecasts in light of this result, notably driven by modest upgrades (4-8%) to DAYBUE sales across FY25-27E supported by ACAD guidance commentary and new salesforce investment. Model updates for more favourable long-run Fx assumptions (AUD:USD to 0.65 from 0.67) are a further tailwind. Together these see our PT lift 5% to $30.80. With imminent (de-risking) NNZ-2591 catalysts this HY, we expect SP momentum to continue, coupled with what we assess are allayed DAYBUE growth fears, continuing to support our OW rating.
Expand
(20min delay)