+++++
Morning all. Extract below. Fairly restrained. But remember that BP fell out of love with NEU last year. Prior to that they hosted a few small lunches etc with RT and friends and were quite bullish. But like all brokers they do get quite pissed off when things drag and the shareprice tanks and the clients get sh*tty (don't we all?).
Interesting that they think that partnering is a Q1 thing. Am not so sure it's that far off. If you're running one of these processes the aim is to always have your base docs drafted and ready to go. Almost like an agreement for lease ie you don't want to have the time and hassle of a full documentation process post results - you want it as ready to execute as possible..... their corporate advisors are excellent and they will want to apply as much pressure to the partnering pool to get to the finishing post as rapidly as possible. It's advisory 101. If you let it drag out the ardour cools. So they will be trying to make the most of any competitive tension as rapidly as possible. I was involved in a transaction a few years back for an asset we were offloading. It was a dog. We had an aggressive co-owner - very prominent bunch but a genuine barbarian. We only had one serious buyer and they were lukewarm and going cold. So we got them in late one evening and the barbarian gave them the "it's now or never speech". Either sign tonight or the crew in the meeting room 3 rooms down will beat you to it (we had some interns in there so the lights were on and there was plenty of activity and pizza etc). It worked and we got rid of a dud asset. It's a cheap trick but the point it's all about the tension. In this case not who to partner (that's a given) with but how to get the absolutely best terms.
Finally, this isn't one of those instances where the broker will have a huge insight - they're just that close at the moment at least. And unfortunately/fortunately RT is like a tomb.
A big hello to all my friends from other places. Love your work Wasa and great to see you OOO and the good Dr here (and yes, am still hugely long that other shared thing but have taken a vow of silence for various reasons which I'll explain when we celebrate the exit in person). Fancy, do you have an email I can reach you on? I have a few things which might interest you re the alternative finance package. Also have a detailed list of who has been buying and selling and it's interesting...........(but not for sharing).
Neuren (NEU)
FDA agreement on Rett Syndrome trial
design reduces uncertainty
Recommendation
Buy (unchanged)
Price
$0.11
Valuation
$0.17 (previously $0.13)
Risk
Speculative
Analyst
Tanushree Jain 612 8224 2849
Authorisation
TS Lim 612 8224 2810
GICS Sector
Pharmaceuticals & Biotechnology
Expected Return
Capital growth 54.5%
Dividend yield 0.0%
Total expected return 54.5%
Company Data & Ratios
Enterprise value $214.3m
Market cap $218.5m
Issued capital 1986.79m
Free float 89%
Avg. daily val. (52wk) $112,515
12 month price range $0.041- $0.11
Price Performance
BELL POTTER SECURITIES LIMITED
ABN 25 006 390 7721
AFSL 243480
DISCLAIMER: THIS REPORT MUST BE READ WITH THE DISCLAIMER ON PAGE 8 THAT FORMS PART
OF IT INCLUDING THE FOLLOWING DISCLOSURE.
DISCLOSURE: BELL POTTER SECURITIES ACTED AS LEAD MANAGER IN THE JULY 2011 AND
OCTOBER 2013 PLACEMENT AND RECEIVED FEES FOR THAT SERVICE.
Page 1
(1m) (3m) (12m)
Price (A$) 0.06 0.06 0.05
Absolute (%) 37.10 32.81 70.00
Rel market (%) 35.27 31.04 63.90
Speculative
See Key risks on Page 6 &
Biotechnology Risk Warning on Page 8
Speculative securities may not be
suitable for Retail clients
Positive FDA meeting de-risks Rett programme
NEU had a positive end of Phase 2 meeting with the FDA on its Phase 3 development
programme for trofinetide for Rett. An agreement has been reached with the FDA on
the key elements of NEU’s proposed Phase 3 trial design for Rett. While some of the
details around the Phase 3 trial design including age group, trial size etc. are not
disclosed as yet, we are encouraged that the key uncertainty around the primary
endpoint and dosing criteria have been resolved. We view the agreement with FDA on
the Phase 3 trial design as a key de-risking event for NEU and we expect NEU’s
partnering discussions will now accelerate. We also expect NEU to progress key
preparatory activities required ahead of a Phase 3 trial for Rett, in parallel with its
ongoing partnering discussions. Subject to a partnering deal for trofinetide concluding
in 1QCY18, we expect that a Phase 3 trial for Rett could start in 2HCY18.
Key elements of Phase 3 design
NEU will be required to run a single double-blinded, placebo controlled Phase 3 trial to
satisfy FDA’s requirements for approval in children and adults with Rett (age group
range not specified). The FDA has agreed to allow NEU to use both RSBQ and CGI-I
as co-primary efficacy endpoints in the trial (vs. NEU’s proposal to make RSBQ
primary and CGI-I secondary). This is not surprising as FDA likely wants the caregiver
assessed RSBQ to be confirmed by the clinician assessed CGI-I. Weight based dosing
criteria has been agreed, with one active dose group. This will ensure drug exposure is
not affected by patient weight. The trial duration will be 6 months (vs. longest duration
of 6 weeks in earlier paediatric trial), which could potentially further improve outcomes.
Valuation lifted to $0.17, Retain Buy (speculative)
No changes to earnings. We have reduced our WACC to 17% (was 19.5%) to reflect
the reduced uncertainty following FDA’s agreement on key points of NEU’s Phase 3
Rett trial. Our DCF valuation has lifted by 31% to $0.17/sh (was $0.13/sh). We retain
Buy (spec). Next catalyst: Further details on the Phase 3 Rett Trial design and
potential licensing deal for trofinetide in 1QCY18
(20min delay)