ASX improves healthcare as Neuren receives US FDA approval for Rett syndrome drug - Stockhead (2023)


  • Neuren's compound Trofinetide has been approved by the US FDA for the treatment of Rett syndrome
  • Trofinetide is labeled as DAYBUE and is expected to be available in the US by the end of April 2023.
  • Healthcare analysts are hailing the news as a much-needed win for the ASX's beleaguered healthcare sector

Australian BiotechnologyNeuren Pharmaceuticals (ASX:NEU)recovery is expected after the US Food and Drug Administration (FDA) approved trofinetide for Rett syndrome, the first drug to treat the rare neurological disorder that occurs in infants.

NEU's main pharmaceutical partner Acadia (Nasdaq:ACAD)announced over the weekendthat the FDA has approved Trofinetide for the treatment of Rett syndrome in adults and pediatric patients two years of age and older.

Trofinetide has been branded DAYBUE and is expected to be available in the US by the end of April 2023. Acadia conducted a positive phase 3 trial called LAVENDAR and submitted the results to the FDA for approval last year.

"As the first drug approved by the FDA for the treatment of Rett syndrome, DAYBUE now offers the potential to make a significant difference in the lives of patients and their families who lack treatment options for the diverse and debilitating array of symptoms caused by Rett syndrome," Acadia CEO Steve Davis said.

Rett syndrome is a complex, rare, neurodevelopmental disorder caused by a genetic mutation in the MECP2 gene and affects about 6,000 to 9,000 patients in the US alone.

said NEU Executive Director Jon PilcherStockheadAfter the announcement, many showed great determination on the long road to this historic result.

"The Rett syndrome community did the best and I'm happy for them," he said.

"For Neuren, this is a transformative milestone that positions us to make the most of the great opportunities ahead as we work with communities to make a difference in four more neurodevelopmental disorders."

said Morgans health analyst Iain WilkieStockheadTheThe LAVANDE study showed tretreatment with DAYBUE showed a statistically significant improvement compared to placebo in both primary efficacy endpoints, and FDA approval should lead to a stock price recovery.

"Commercialization is fast, with availability from April," he said.

“It's a big catalyst for Neuren and triggers milestone payments, royalties, potential sales of Priority Valuation Vouchers (PRVs).

Game-changing finance for NEU

The approval of Trofinetide prompted a significant milestone and royalty payments to NEU, which received a $10 million payment when the FDA accepted Acadia's submission for review.

"We will get US$40 million when they make the first commercial sale, and then they will be given a priority voucher to review a rare pediatric disease, which is marketable, and we get a third of what they sell it for."

“They've been consistently selling for $100 million, so that's another $33 million.

"And then we start getting royalties every quarter from Acadia when they start selling it."

Pilcher said the approval would be a major financial transformation for the company, which is not yet profitable but has other drugs in the pipeline.

He said that under the original deal struck in 2018, Acadia had rights to the North American market.

"We kept the rest with free access to everything they made for use around the world and that was a huge deal value for us," he said.

Pilcher said that while FDA does not mean approval in other countries, it reduces risk and means you have an FDA-approved package for use elsewhere for regulatory applications elsewhere.

Analysts welcome good news for NEU and the biotech sector

said Petra Capital healthcare analyst Tanushree JainStockheadThe approval is a significant event for Neuren and changes them from both a risk and financial perspective due to different cash infusions from existing partner and royalty income.

Jain said the U.S. approval and U.S. pricing will be a boost to licensing discussions the NEU is having in other markets for trofinetide.

"The terms that will be finalized there would help us have a reference price for the US," he said.

"For investors looking at Neuren now, this is probably another big catalyst."

said Morgan health and life sciences specialist Scott PowerStockheadsaid the NEU's approval was welcome news for the industry, which had been out of favor for 12 or more months.

"These types of big events can make a difference on the ground - this is a big day for the NEU and the Rett community," he said.

"This is a terrible disease for which there is no cure so far.

“In addition to the benefits for Rett patients, NEU will benefit from expected milestone payments of A$104 million plus double-digit royalties from net sales, with NEU having a current cash position of A$40 million. "

Jain agrees that the NEU approval is a milestone for both the company and the ASX's healthcare sector.

"We have very few companies that have actually crossed the finish line and been able to get FDA approval," he said.

"TechnicallyCSL (ASX:CSL)As a stand-alone biotech company that's probably the biggest success we've had, but after that there aren't many and I can probably name a few companies that have FDA-approved products on the market and are still single.

"This will definitely be a win for the industry and I expect with a win like this we will find more major investors wanting to play and invest in the industry."

"It's important for the industry because the US is the biggest market, the FDA is known as the strictest regulatory body, so getting the approval also speaks to the whole Australian biotech industry with the quality of the data, the trials that have been done and the assets."

Setting for the second drug in the phase 2 trial

In January, the FDA granted IND approval for NEU to move forward with a planned Phase 2 clinical trial of another electrode, NNZ-2591, in children with Prader-Willi syndrome (PWS).

In addition to PWS, NEU's Phase 2 trials of NNZ-2591 are targeting three other severe neurological disorders that occur in early childhood, including Angelman, Phelan-McDermid and Pitt Hopkins syndromes.

All four programs have been designated an orphan drug by the FDA, which upon approval grants tax credits for specialized clinical trials, waivers of user fees and potential seven-year market exclusivity.

Neuren previously reported positive results in a Magel2-null mouse model of PWS.

The study found that treatment with NNZ-2591 for six weeks normalized fat mass, insulin levels, IGF-1 levels and all behavioral abnormalities.

I've been saying for a long time that we're worth a lot more than trofinetide, Pilcher said.

“Both are involved in the biology of IGF-1 in the brain, which is a growth factor critical for normal brain development and maintenance.

"The number of patients we want to target with NNZ-2591 is five times greater than patients with Retts syndrome."

There are currently three Phase II trials and a fourth is expected to begin with first results expected in the second half of CY 23.

"The FDA approval of trofinetide and the funding that will flow to us from that will put us in a great position going forward and means that we have options in deciding the best way forward for NNZ-2591," Pilcher said.

Jain said the FDA's approval of Trofinetide helps reduce the risks of NNZ-2591.

"It has some similarities with trofenetide, which is a risk aversion effect, because it worked in a disease without an approved treatment and the endpoint was very difficult without a predefined pathway," he said.

“This similarity is an aspect of risk aversion, but NNZ-2591 has some distinguishing features that increase its prospects and target indications that are cumulatively likely to be five times greater than trofinetide.

"I believe these assets unlock additional value for the stock."

NEU's share price has risen 83% in the past year as the company jumps over the hurdles needed to bring the drug to market.

Today's NEU share price:

The views, information or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise accept responsibility for any financial product advice contained in this article.

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