Last year the drug the company licensed to Acadia Pharmaceuticals generated sales of US$391 million, which was up 12% on the previous year. The forecast for this year is between US$460 - US$490 million, with an increased drive from a new management at Acadia.
The drug, DAYBUE (trofinetide), is approved for the treatment of with Rett syndrome. In the US there are at least 6,000 people with the disorder (formally diagnosed, and up to 9,000 in total), with 2,000 having now trialed the DAYBUE treatment and 1,070 remaining on treatment at the end of March.
Neuren generated $65 million of royalty income from drug sales last year. That should increase this year from increased royalties from growing sales, and is also with a US$50 million milestone payment when drug sales pass US$500 million in a calendar year, and US$100 million when they pass US$750 million.
Acadia has made some changes to improve adoption and continuation of treatment. The side effect of diarrhea has been 'managed massively better' according to Pilcher. Acadia has increased the level of sophistication with respect to information to prescribing doctors who are not specialists in the field. It has also increased the sales force by 30%. Most recently Acadia introduced a new formulation of DAYBUE, called STIX, which does not need to be kept in the fridge and can be added to any drinks.
Whilst the decision by the EMA to not approve trofinetide in February this year is disappointing for the companies, Acadia plans to request a re-examination. Pilcher said that historically there is between a 20% - 30% chance of success from re-examination requests with the EMA.
NNZ-2591 Progress
Neuren's second compound in development is NNZ-2591 for the treatment of Phelan McDermid Syndrome. Both PMS and Rett syndrome are disorders where the connectivity in the brain is impaired. The treatments help to restore that disconnect by restoring IGF-1 levels in the brain.
Neuren's Phase III study is underway in 160 subjects. Results are due at the end of next year if it can match the recruitment rate of Acadia in its Phase III study with trofinetide in Rett syndrome. To achieve approval, the trial will need to meet both primary endpoints, which it did in the Phase II study. Pilcher said that the potency of NNZ-2591 eclipsed that of trofinetide in clinical studies to date, albeit for different indications, but on the same measures.
Franking Credits
Pilcher was asked about the potential for dividends to shareholders. Noting that the company has been conducting a share buyback, he also acknowledged the large level of franking credits that the company is holding.
Neuren is capitalised at $1.6 billion with $296 million in cash at the end of last year.
Bioshares recommendation: Buy
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