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Neuren Pharmaceuticals (NEU) - Daybue long-term efficacy is encouraging Partner Acadia’s oral presentations at the recent American Academy of Neurology’s meeting included encouraging long-term efficacy outcomes from DAFFODIL open-label trial in younger rett patients (age 2-4). A summary of caregiver’s experience with Daybue showed it having a meaningful impact across key rett symptoms.

Net-net we view the data as incrementally positive in terms of overall clinical profile of Daybue but more importantly in terms of longer-term persistence with the drug. Daybue commercial update by ACAD and upcoming results from NEU’s NNZ-2591 trials are key near-term stock-price catalysts.

DAFFODIL trial results: Key highlights12/15 patients completed the study, implying an 80% persistence rate. We believe the age and dose-titration in the trial likely drove the high persistence rate. Diarrhea (80%) and vomiting (53.3%) were the most common adverse events, all of mild-moderate severity.

Long-term data (out to 18 months) showed sustained improvement in both clinician (CGI-I) and caregiver rated (CaGI-I & ICND-QoL) efficacy outcomes encompassing rett symptoms and quality of life (Figure 1, Figure 2, Figure 3). The benefits extended with time on therapy.Notably, a CGI-I responder analysis demonstrated that the proportion of patients with a ‘much improved’ CGI-I score of 2 relative to baseline increased throughout the study, as did the proportion of those who saw some improvement (CGI-I score 1-3). 80% (12/15) of patients had some improvement (up from 60% at week 12) and 47% (7/15) were ‘much or very much improved’ i.e. had a CGI-I score of 1-2 (up from 27% at week 12).

Data bodes well for Daybue persistency in real worldData highlights that some patients could take >12 weeks to see an improvement (most see early on) and that the level of improvement increases with time on therapy. This bodes well for the real-world long-term persistency of Daybue. The 80% trial persistence is higher than the ACAD guided 50% long-term rate, albeit closer to the ~47% rate of the much-improved patients.

Retain BUY and $29.01/sh TPNo changes to earnings. Daybue (US & Ex-US) for rett and $229m cash are worth ~$16.6/sh on our SOTP DCF valuation. NNZ-2591 is minimally reflected (~$9.6/sh) and offers meaningful upside.Key Dates AheadMay’24 – Acadia 1Q24 results (PCe week of 6th May).2Q24/3Q24 – NNZ-2591 Pitt Hopkins results (PCe May’24) and Angelman trial results (PCe July’24).