Neuren Pharmaceuticals Limited

ASX:NEU

Neuren Pharmaceuticals Limited

ASX:NEU
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$19.70 (+2.7%)
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Forum Topics NEU NEU SP Drop Yesterday

Pinned straw:
mikebrisy
Added 2 months ago

I've been trying to think why $NEU price plunged 15% yesterday on them releasing the DAYBUE sales results.

My hpothesis is that when the market saw the chart below from the release, they thought this was showing TOTAL revenue. Its not, Its showing Royalty Revenue, as labelled in the slide.

3dd681f1a072dc60492247853467a4806e2b39.png

They didn't include the US$50m milestone payment. Today we see a more complete view, below.

e9d1f234a1cd3b0407419f9d3331ebcc5ad786.png


Were ASX investors so jumpy about the short report that there was a knee-jerk reaction to seeing an incomplete number below consensus? Can investors be so dumb? Or am I missing something?

Whatever, I increased my RL position by around 25% at the dip. Yay. (And upped on SM, at a slightly less good price)

Just on the results call now.
Noddy74
2 months ago

I wondered the same @mikebrisy

I thought it was surprising Neuren left off the milestone payment from the original graphic (it is $50 million! I'd miss that if it wasn't in my bank account one morning). I briefly wondered if peeps plugged the figures into their models without the milestone payment and came up with a much lower valuation than they had the day before. But surely the analysts know better than that...don't they?? Maybe I'm giving them too much credit.

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mikebrisy
2 months ago

@Noddy74 It is also worth noting that $ACAD dropped about 10% overnight, so maybe when the release came out, "hot money" was spooked by shadows. Some other points to note.

$ACAD's overall outlook for FY24 and FY25 is weaker, so there have been some revenue downgrades. However, on Target SP, before the result release the consensus SP was $34.25. After about 8/21 revisions (7 down, 1 up) the consensus is $33.60, compared to yesterday's close of $23.74. So overall the market is still seeing $ACAD well below the 12m Target Price.

Jon was asked about SP reaction today on the call and he said words to the effect that "there may be a constituency in the market who may have been looking for bad news in the result".

So, what might the bad news be? Well, for those who remain open to the short thesis, they could see the decline in patients today 860 vs. 900 at end Dec, which has been ascribed to clinic closures over the holiday period, as really due to early warning signs. Indeed guidance is for 1Q24 revenue to be below 4Q23 revenue as a result.

Jon was asked about the Culver Research report today. He was quite dismissive of it and said it and its author "have no credibility", it has had too much air time, and he didn't want to give it anymore air time. He reflected that it didn't get a lot of attention in the US, and said he was surprised/(annoyed/ disappointed?) it had been given so much attention in Australia.

I'll not report more on today's call as there was little new information.

Jon reiterated the 5X opportunity of NNZ-2591, and just how much stronger the NNZ-2591 benefits in the P2 trial were compared with trofinetide at the same time in its development. He really does have very high conviction on it.

My personal reflection on all of this is that, when you really research the stocks you hold, and really understand their value, market gyrations can only leave you bemused and even entertained. That said, I was offered a gift to buy more cheaply yesterday. The overall rising tide of my portfolio during results season has allowed me to increase my holding of $NEU without violating my position size rules.

Happy Days!

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