Pinned straw:
$NEU announced the initial read-out of it Phase 2 Clinical Trial of NNZ-2591 for Pitt Hopkins syndrome.
Their Highlights:
- Statistically significant improvement from baseline assessed by both clinicians and caregivers in all four efficacy measures specifically designed for Pitt Hopkins syndrome (Wilcoxon signed rank test p<0.05)
- Clinician and caregiver global efficacy measures showed a level of improvement considered clinically meaningful:
- Clinical Global Impression of Improvement (CGI-I) - mean score of 2.6, with 9 out of 11 children showing improvement assessed by clinicians
- Caregiver Overall Impression of Change (CIC) – mean score of 3.0, with 8 out of 11 children showing improvement assessed by caregivers
- Improvements were seen in clinically important aspects of Pitt Hopkins syndrome, including communication, social interaction, cognition and motor abilities
- NNZ-2591 was safe and well tolerated, with no serious or severe adverse events and no meaningful trends in laboratory values or other safety parameters during treatment
- Second positive Phase 2 trial result further strengthens confidence in NNZ-2591's potential relevance for multiple neurodevelopmental disorders
The webinar is at 11:00 today, but in advance of that, these look like very strong results to me – even given the small sample size.
My Assessment
The CGI-I mean score of 2.6 compares with the score of 2.4 in the PM trial, so only slightly less strong, and the difference between the two is not statistically significant.
Equally, the CIC mean score of 3.0 compares with a score of 2,7 in the PM trial. Again, slightly less strong, but again the difference is likely statistically insignificant.
From a physician's perspective 9/11 children showed improvement and from a caregiver prespective, it was 8/11. That's very positive.
See graphical analysis from the presentation below:
So that’s two-from-two at this stage.
We have to recognise that it is still early days for NNZ-2591, with years until we have a commercial drug in the market. But this is very good news, from my reading of it.
NNZ-2591 is currently undergoing clinical development for four rare neurological conditions at Phase 2 clinical trial level. All programs have been granted Orpha Drug designation by the FDA. The results of the trial for Phelan-McDermid were reported in December, showing significant improvements in that condition. The next cab off the ranks is Angelman syndrome, for which the company announced completion of enrolment of subjects in December 2023. This trial is expected to report in Q3 2024. The final of the four, Prader Willi, opened its first site in June 2023, but I don’t recall having heard further information on progress.
Implication for Valuation
Clearly positive.
With potentially 10,000 patients in the US, NNZ-2591 for PW alone could be another DAYBUE, albeit discounted off into the future by 3 years, and perhaps discounted by 50% as the CoS from here. Still, if you value DAYBUE around $20, and you assigned no value to PW, then today you might add anywhere from $5-$7 of SP value. Let's say NNZ-2591 has already recognised half this value for PW, then you'd see the SP rationally increased by $2.50 - $3.50 off today's news. We'll see.
In any event, the market will clearly respond positively to this news.
I recently reduced my exposure to $NEU by one-third, given that I have marked down the valuation of trofinetide based on the latest DAYBUE sales. Clearly, with four potential conditions to treat, the ultimate value of NNZ-2591 may dwarf trofinetide, and today’s result makes me feel more bullish about the prospects for $NEU.
I need to mull this one over. Such it the rollercoaster of drug development, that there is time for a considered response after the heat of the day has passed. $NEU remains by 7th largest RL holding, although after today I imagine it will pop up to 6th or maybe even 5th.
Disc: Held in RL and SM
Not much to change after the investor call from my top line assessment this morning. However, I will correct an error in my earlier straw, and while I'm at it add a couple of points of detail.
Correction:
In my earlier straw I wrote about there being 10,000 people with PH in the US. I came to this from my own calculation of the prevalence rate x the US population. That was incorrect.
The "Potential PH Population" is 6,000-7,000 in the US and 39,000 - 47,000 globally. However, we don't acutally know how many cases have been diagnosed. A PH Syndrome Census was started in Q1 2023, and as of today 1,391 people have been reported in the census, of which 497 are in the US. The number identified by the census is growing c. 30% annually.
CEO Jon Piicher said today that often PH goes undiagnosed, or is misdiagnosed as austism. He believes that as more drugs that can treat these rare neurological conditions come to market, the level of diagnosis will increase, as the community demands greater clarity over whether there is a treatment for their specific condition. One way to track this specifically for PH is to continue to track the cases in the PH Syndrome Census, which it itself provides a database of sufferers and will aid commercialisation of the drug, if approved. It appears to be updated quarterly, and so I am sure Jon will continue to provide regular updates because the value and growth rate will be used directly to value the PH market.
With a smaller diagnosed population, that indicates to me that the initial uptake of NNZ-2591 for PH, if approved, is likely to be more modest than DAYBUE. Of course, with likely 2-3 years to any approval - assuming a successful Phase 3 and NDA - the number of identified patients might grow significantly. All that said, my quick calculation of valuation uplift was almost certainly a little exuberant, and therefore you'd realistically halve the numbers again.
Other Insights from the Call
- They've stopped recruiting new patients for the Prader Willi trial. That's because they want to negotiate a less onerous safety protocol with the FDA given the positive experiences in the PM and PH trials. The level of safety testing is very onerous for trial participants, and the slow rate of titration up to the target dose also draws out the process. With good safety data now establised, Jon argues this is an unnecessary impost to put trial participants through. But this would have to be approved by the FDA.
- I was reminded by Jon that PM and PH are the two front runners because there is nothing in the market or in prospect for these conditions. So it makes sense for $NEU to be first to market and establish itself with these.
- $NEU are meeting with the FDA in Q3 2024 to review the PM Phase 2 results, and from these discussions they'll be in a position to design the Phase 3 trial. So, hopefully, we'll hear about the Phase 3 trial design before the end of this year.
- Given that both the PM and PH trials achieved all of the disease-specific designed endpoints, a key to future success will be for $NEU to make the case with the FDA to accept these as the endpoints for the Phase 3 trial. This will be a key bit of newsflow to look out for.
- I think I heard Jon say that the Angleman trial has also completed - but I'll need to check the transcript for that, as that third trial is only due to read out in Q3 2024.
- In terms of the quality of the result, Jon reinforced that the PM trial result was the standout, and that today's PH result was more akin to the trofinetide result. However, he said that this was perhaps to be expected given the nature of the different conditions. (I flag here that this went over my head in terms of my lack of clinical understanding.)
- Some Q&A on vauations, with Jon pointing out that there are some single-drug-single-indication companies valued much more highly that $NEU. So, while he wouldn't comment on SP, its good to see that he thinks the business is worth a lot more than the current market cap. I hope the Board agrees, because I'd hate for it to be sold too cheaply to an acquirer.
Overall, Jon's demeanour was very positive. He's clearly delighted that this positive result indicates that NNZ-2591 is likely to be a platform drug able to treat a wider rnage of conditions that are impacted by the bioavailability of the IGF-1 growth factor. He wouldn't be drawn on future developments other than to say that they are going to stay focused on the orphan drug indications. This is commercially important because orphan drugs command high prices, and he clearly doesn't want to get into the space where he is marketing a drug for orphan and non-orphan conditions simulataneously, as this would be tricky (I think that was his word, but in essence, I think it is about not undermining the value of highly priced indications.)
The market has clearly liked the news, with the SP now up 10% - so clearly took heart from the additional commentary provided in the call.
I'm a happy hold. This one has further to run over the coming years - so far the execution and the results are flawless.