Just noting that UBS have initiated coverage of Acadia (ACAD) with a buy and a lot of their positive thesis around the company is focused on daybue launch acceleration. Notably their Daybue sales estimates for FY23-25E are 4-6% above consensus and largely in line with Petra Capital estimates.They also share our sentiment that Daybue is off to a great start (successful first quarter of launch) with Acadia executing well and that it can continue to surprise to the upside/surpass expectation.
A lot of the key sentiments they have shared in the report line-up with what we have been thinking and what our rett experts have been telling us that concerns around the tolerability (diarrhea and vomiting) and duration of therapy (persistence) are overrated and that in real world they are manageable and that people are getting benefit even at 2/3rds of the recommended dose of the drug. Key points of noteUBS peak sales for daybue is ~US$900m assuming 40% peak market share and rett diagnosed population growing to ~6k – We are slightly ahead with US$1.2bn peak sales, assuming 40% net market share and rett diagnosed population growing to 6.7k at peak.
They expect Daybue to generate US$149m in sales in FY23, climbing to US$557m in FY26 – This is in line with PCe US$146m in FY23 sales, rising to US$556m in FY26Daybue has material benefit to patients being the only treatment option for rett which is a highly debilitating disease – Essentially re-iterating its first mover advantage as the first and only drug approved for rettThey expect chronic use of Daybue and expect as physicians/patients learn to manage the side effects persistence likely to be high.
They also note that physicians are titrating patients and some may end up being on lower doses than recommended but still see benefits. – In line with what our expert said that he sees 80-90% persistence albeit not everyone will be at the recommended dose, but they are still seeing benefits even at the lower dose
they have re-iterated continued payor adoption, Acadia Connect physician and patient support programs to be key in capturing market share – Consistent with our thinking and we believe this has really accelerated the uptake curve for the drugOn competition they have also noted Anavex’s blarcamesin, Neurogene and Taysha’s gene therapy but called them nothing material and also noted that for gene therapies they don’t expect market entry till 2028 – Again in-line with our thoughts and we note that Neurogene’s recent documents suggest that they do not expect to get to market till 2030.
Another encouraging note from Acadia sell-side analysts with several of our sentiment on Daybue and its opportunity re-iterated, where expectations are now building around Daybue beating guidance, surprising on the upside and assuming that the drug is free from any material competition for years to come, enabling it to capture market share underscored by physician and patient demand. The drug is the only one approved for a debilitating disease and patients are seeing benefit, with dose titration and other side effect management strategies working and helping with persistence even at lower than recommended dose.
I re-iterate my strong Buy and $23.55 TP on NEU and see this as a great Buy on current stock price weakness, noting I think markets focus on Anavex as near term threat is higher than warranted and we do expect a strong update in early November from Acadia (potentially beat) for both 3Q and 4Q guidance coming up better than we expect and lastly December NNZ-2591 proof of concept results which we continue to see as a free call option being a key de-risking event for NEU and driver of upgrades especially as we do not believe the current stock price reflects any value for this asset.From Petra capital
NEU Price at posting:
$11.57 Sentiment: Buy Disclosure: Held
(20min delay)