I can see quite a number of HC contributors do hold NEU (Neuren Pharmaceuticals) shares, If we could borrow the trajectory of NEU's share price before and after FDA approval, we might have a better idea of how PYC's SP would track from here.
Is PYC's share price going to behave like NEU before and after FDA approval?
In a nutshell, yes, but much better! The devil's in the detail.
First, the burning question -
To sell or not to sell one of the drug assets in the pipeline?
A few months ago, most of us were very concerned that a Cap Raise is coming. It would be much preferred to sell a drug asset in a BD to fund the ongoing clinical trails. Well NEU is a good example! Let's see if it is a good idea.
NEU sold its North American distribution rights for their Rett syndrome drug Trofinetide to Acadia in 04/2023, to be marketed as DAYBUE. In 07/2023 the deal was expanded to cover Europe, Japan and rest of the world.
https://acadia.com/media/news-releases/acadia-pharmaceuticals-acquires-ex-north-american-rights-to-trofinetide-and-global-rights-to-neurens-nnz-2591-in-rett-syndrome-and-fragile-x-syndrome/Who is making more money - NEU or Acadia?29/02/2024
Acadia announced
fourth-quarter net sales of DAYBUE (trofinetide) in the US of US$87.1 million.Neuren said this was the second full quarter of sales since launch in April 2024. Net sales for 2023 since April were US$177.2 million. Acadia also provided guidance for full-year net sales in 2024 of between US$370 million and US$420 million.
Neuren said it anticipates royalties of A$12.8 million for the fourth quarter of 2023, up from A$10.4 million for the third quarter and A$26.8 million for the full year 2023. It said it anticipates royalties of between A$61 million and A$70 million for the full year 2024.
So NEU is only getting A$12.8M out of the 4th Quarter sale of A134M, i.e. 9.55% in royalty. Is that a good deal ???https://biotechdispatch.com.au/news/neuren-pharmaceuticals-reports-fourth-quarter-royalties-from-dayNow let us study the trajectory of NEU's share price before and after FDA approval. In the past 10 years, SP had been basing at the $1.00 mark. For ease of calculation, $1.00 was used as the base line where the SP had jumped due to major news.
Recent major events and their effect on NEU's SP:(See NEU's weekly chart below)
- 19/02/2020 3X @ 3.04Rett syndrome drug TrofinetidePhase 3 trial timetable released
- 23/03/2020 dropped to 1X @ 0.97Share price artificially pushed down for accumulation on confirmation of Phase 3trail timetable and details
- 08/12/2021 3.8X @ 3.85DAYBUE (Trofinetide) forRett syndrome Phase 3shows stunning efficacy [It took 22 months to do a12-month trial due to Covid]
- 13/09/2022 7X @ 7.18DAYBUE submitted for FDAApproval and receivedPriority Review
- 13/03/2023 13X @ 13.23FDA Approval of DAYBUE(Trofinetide) treating RettSyndrome. NEU to get US$40Mfrom Acadia for 1st commercial sale
- 13/11/2023Phelan-McDemid syndromdrug Phase 2 completed
- 18/12/2023 24X @ 24.04Phelan-McDermidsyndrome drug Phase 2efficacy "significant"
- 29/02/2024NEU reportedannual net profitof A$157M, P/E=17(All from Acadia)
Observations:
- With only 1 drug, good efficacy would move the SP by 4X
- FDA Approval would make the SP jump by another 3X (or 13X from baseline)
- Adding the 2nd drug's good Phase 2 efficacy caused SP to be nearly another 2X (or 24X from baseline) ****** Note that the BIG JUMP in SP is due to the fact that the Phelan-McDermid drug is 100% owned by NEU. Whereas the Rett syndrome drug is already sold to Acadia and NEU is only earning % royalty. Now you would appreciate selling the crown jewel is not a good idea and a Cap Raise is painful and dilutive, but it's only a short term pain for long term gain!
- With 1st drug FDA approved and 2nd drug showing good efficacy in Phase 2 trial, the P/E is already at 17. This would bow well for PYC.
- Beware! The SP could be artificially pushed savagely back down to baseline for accumulation BEFORE efficacy data is released.
PYC Valuation:If all goes well, the ADPKD drug would be commercialized in 2028 with an estimated recurring annual earnings of US$10b. This would translate to an earning of around A$3.64 per share. If 10% of which is ploughed back to new drug discovery and 90% distributed as dividend, say A$3.28/share and investors are happy with 6% dividend yield,
the share price should be A$54 at P/E=1. Try P/E=10. It would be a mega bonza! This is only based on one drug being approved and there are 3 more to come.
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