Neuren Pharmaceuticals Limited

Strategic Agreement for developing and Commercializing Trofinetide Drug: Neuren Pharmaceuticals Limited’s (ASX: NEU) stock climbed up 5.26 per cent on August 08, 2018 following a heavy plunge a day before while the group announced that ACADIA Pharmaceuticals Inc and Neuren Pharmaceuticals Limited have entered into an exclusive North American License Agreement for the development and commercialization of trofinetide for Rett syndrome and other indications. According to the release, ACADIA plans to initiate a Phase 3 study of trofinetide for the treatment of Rett syndrome in the second half of FY19 after the completion of additional manufacturing activities.

This study will assess trofinetide and placebo in approximately 180 young ladies with Rett syndrome and will gauge the Rett Syndrome Behavior Questionnaire (RSBQ), a caregiver assessment, and the Clinical Global Impression of Improvement (CGI-I), a physician assessment, as co-primary efficacy endpoints. As per the agreement, NEU will hold the rights to develop and commercialize trofinetide for all indications outside of North America and for that matter NEU will receive an upfront fee of US$10 Mn plus potential milestones of up to US$455 Mn and tiered, escalating, double-digit percentage royalties on net sales of trofinetide. Additionally, the group is eligible to receive tiered, escalating, double-digit percentage royalties on net sales of trofinetide in North America and one third of the market value of any Rare Pediatric Disease Priority Review Voucher, if awarded by the U.S. FDA upon approval of a New Drug Application for trofinetide. We expect that the aforesaid deal has a potential to generate significant revenues in the future for the company. Besides this, the company is seeking towards to initiating a Phase III study in the second half of 2019 to further explore the potential benefits of trofinetide for patients and their caregivers. On the other hand, the group is also advancing with regards to developments of NNZ-2591 for autism and other neurodevelopmental disorders.


Operating review of RSBQ and CGI-I (Source: Company Reports)

On the financial front, net margin turned around to be positive for the full year (FY17) and recorded 485% from the negative margin of 359.9% in FY16. RoE stood at 32.0% in FY17. The current ratio substantially increased from 2.99x to 10.18x in FY17 from the previous year. Meanwhile, the share price has fallen 47.95 per cent in the past three months as at August 07, 2018 and traded at 35.3% over its 52-week low level ($1.160). Hence, we give an “Expensive” recommendation” on the stock at the current market price of $ 1.600 and it is better if one can wait and watch for further developments.

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