Petra capital
Neuren Pharmaceuticals (NEU) - All eyes now on Daybue for Acadia NEU’s partner Acadia suffered a pipeline setback earlier this week with the failure of its Phase 3 schizophrenia trial for Nuplazid. Consequently, the focus for Acadia investors is now on Daybue given it’s the company’s only growth driver in the near-term. We see the likelihood of Acadia monetising its priority review voucher (PRV) in 2024 has increased with one-third of the proceeds payable to NEU.
With two more Phase 2 trials to read out by mid-CY24, for NEU the spotlight remains on its second drug NNZ-2591. We continue to view NNZ-2591 as key for unlocking further value in the stock. We retain Buy and $29.01/sh TP on NEU.PRV monetisation now likely by AcadiaWe do not see any immediate program for which Acadia may use a PRV for.
Hence, monetisation is more likely now to shore up its balance sheet to allow it to focus on business development and to allow it to progress the development of other clinical stage assets including NNZ-2591, for which it acquired rights for rett and fragile-X syndrome only from NEU last year.Price of PRVs are stable, but could increaseThe sale price of PRVs have remained relatively stable over last 3 years at ~US$104m on average (Figure 1), with last 4 PRVs sold at ~US$100m average price.
The stability is driven by a market which sells PRVs in order of their grant to avoid price competition, with ~4-5 of these vouchers sold in a year.We note there are only 4 other PRVs (apart from Acadia’s) that are yet to be sold. These are held by large companies which could choose to use it for a program which otherwise would not qualify for a priority review.The PRV program is due to expire in Sep’24with a bill in US Congress to extend it.
Should it not extend (we think unlikely) it could increase PRV prices after that. In our forecasts we have assumed NEU receives its share of US$33m (of US$100m) sale of PRV in 2H24.Retain Buy and $29.01/sh TPNo changes to earnings.
We retain Buy rating and $29.01/sh TP on NEU based on a risk adjusted DCF.Daybue (US & Ex-US) for rett and $229m cash are worth ~$16.6/sh on our SOTP valuation. NNZ-2591 is minimally reflected (~$9.6/sh) and offers meaningful upside with key de-risking events coming up.Key Dates AheadMay’24 – Acadia 1Q24 earnings call.2Q24/3Q24 – NNZ-2591 Pitt Hopkins results (PCe May’24) and Angelman trial results (PCe July’24).
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