There is a very limited selection of Biotechnology stocks of substantial size available for investment on the ASX. One stock that has rapidly propelled itself onto that short list is Neuren Pharmaceuticals (ASX:NEU). Neuren’s market capitalisation is now hovering around A$1 billion making it the fourth largest biotech stock on the local bourse. The share price was $1 back in November 2020. Last week it peaked above $9 before retracting below $8 this week.
There have been two significant catalysts that have led to this share price appreciation.
In December 2021 they announced that the treatment to address Rett Syndrome, Trofinetide, had successfully completed a phase 3 trial. The share price rocketed from about $1.80 to $4.00 on the news.
In July 2022 they announced that their partner Acadia Pharmaceuticals (NSQ:ACAD) had submitted a New Drug Application (NDA) with the US Food and Drug Administration (FDA) for Trofinetide to treat Rett Syndrome.
In September the FDA accepted the NDA for priority review. This triggered the first milestone payment from Acadia to Neuren for US$10 million which was received in October.
Neuren is developing therapies for neurodevelopmental disorders. They have two drugs in the pipeline. The most advanced is Trofinetide which looks to address Rett Syndrome and Fragile X, two developmental disorders that both stem from a mutation in the X Chromosome. The second compound, known as NNZ-2591, is for the treatment of Phelan-McDermid, Angelman, Pitt Hopkins and Prader Willi syndromes. At present, there are no approved treatments available for any of these conditions.
Source: Neuren, Jefferies London Healthcare Conference 2022 Presentation, 18/11/2022
The next major milestone for Neuren is to achieve FDA approval of Trofinetide for Rett Syndrome with the target action date set for 12 March 2023. Historical studies have shown that drugs for neurological disorders are approved about 83% of the time. If approved, Neuren will be one of only a handful of ASX listed companies with an FDA approved pharmaceutical product.
Approval would trigger the transition from a clinical development company to a company generating substantial revenues and cash flows. At this point, Neuren’s compound Trofinetide is well ahead of any of the competing solutions that are under development. Should the treatment receive marketing approval and prove effective, this head start, along with…
