@wtsimis here are a few thoughts - I hadn't done my $NEU prep. yet, so your questions helped prompt me!
Revenue is totally determined by Acadia / DAYBUE, which is known and you can see Jon's charts for that. No big royalty milestones for the foreseeable future. (Maybe FY27). Acadia is de-risked in my view, because they have a good CEO in Catherine Owen, and the Commercial VP also seems to be good. They are also willing to spend more on sales and marketing to expand US-market penetration, which is good for $NEU which is on a revenue royalty. Also, Catherine Owen is very experienced in rare disease treatments in Europe, so I anticipate good decision-making by Acadia for DAYBUE in the EU.
$NEU costs will be driven by R&D and clinical trials, but there is a huge cash pile, to fund that.
In terms of tracking $NEU, I am focused on the following:
- DAYBUE - closely track the quarterly revenue trends and KPIs by Acadia Pharmaceuticals. I expect them to hit mid-to-upper end of 2025 revenue guidance.
- NNZ-2591 clinical development milestones. PMS phase 3 trial is the next biggie. Just kicked off. So, I will be listening to what Jon has to say about that.
- NNZ-2591 - new indication for SYNGAP-1 related disorder. Hopefully we'll hear more about that. But, commercially, it's some way in the future. 5+ years?
On valuation, check my SM valuation, from a year ago.
I had DAYBUE valued at $12 - $16 - $20. This, in retrospect, was probably a little bullish, and if I were to model it again, I'm GUESSING I'd be more like $12 -$14 - $16, i.e., upside muted but downside firmed up.
NNZ-2591, pick a number! I was $0 - $16 - $32, and the addition of the latest indication probably means I'll stick to that, but if all indications succeed (very unlikely, but possible) then the sky is the limit.
On a sum of parts, where I more heavily risk the development valuations, I'm happy to sit with my valuation of c. $24, but with a very wide range around it. I expect that when I redo my valuation the combination of less risk on DAYBUE, more cash, more excitement for NNZ-2591 will see my valuation nudge updwards.
(The analyst consensus is $24.86, which is an average of 8 TPs ranging from $18.60 to $30.90)
Why I like $NEU, is that I cannot see it being worth less than $12, so the upside both from DAYBUE and then from NNZ-2591 is highly assymetric. This is why I refer to my investment thesis for $NEU as "Two for the price of one". We are getting NNZ-2591 development exposure for the value of DAYBUE. Basically, a speculative upside is being almost entirely underwritten by an established commerical product in the market. In other words, buy $NEU and get DAYBUE plus NNZ-2591 for free and a cash pile.
The cash pile was $359m (pro forma) at end of FY24, As you say, they've spent c.$50m buying shares cheaply, but the cash is still flowing in from Acadia at A$62-67m for CY2025, which is probably more than they are spending.
In conclusion, I have no idea what the $NEU share price will do in the short term. Nor do I care that much. My horizon for $NEU is 3-to-5 years, and the thesis is well and truly on track.
Hope that helps. Personally, I would not hold $NEU if I was concerned about the SP in the next 1-2 years. Of course, I can conceive of negative outcomes that would make me act, e.g.,
Scenario 1: DAYBE starts to significantly underperform in the US and it fails to get reimbursement agreements in the UK/EU (and remains on "managed access" indefintely).
Scenario 2: NNZ-2591 PMS Phase 3 initial readout in 2026 is negative.
In those cases, I would probably reduce my holding to reduce the risk exposure. Currently, I am at a c. 5% of my RL ASX portfolio.
I'll have another look at my valuation for $NEU after reporting season, and after I've heard what Jon has to say.
In summary - I am very happy where this one is at.
Disc: Held in RL and SM