Neuron’s value lies in:  

1)       Both Trefinitide (Daybue) sales in the USA and potentially in RoW 

2)       NNZ 2591 – This has (currently) four identifiable valuation parts:  Phelan McDiarmid (PMS),  Pitt Hopkins (PTHS),  Angelman’s and Prader Willi conditions. Prader Willi is still in Ph1, so ignore for now.

Friday’s upcoming announcement for Angelman’s Ph2 results are likely of lesser relative valuation importance because:

i)  Angelman population size is not as large as the PMS condition (the most promising). It is about 60% the size, though larger than PTHS.

ii) With respect to Angelman’s drug development, there are other companies ahead of NEU.  

John Pilcher last month stated NEU’s priority will be in progressing Phelan McDiarmid (PMS) and Pitt Hopkins (PTHS).  (JP emphasised just how important it was to get FDA approval and get to market first).

PMS is particularly favoured for development because:

-           it has a sizable market (1,700 known patients though potential 17,000 to 32,000),

-           they reported excellent Ph2 results

-            with PMS (and PTHS) they are ahead of the competition. 

How the market reacts to the Angelman’s Ph 2 results when muddied with Acadia’s recent sales results is anyone’s guess. A good Ph 2 results will be of course a positive, but it is not the main game.   

This quarter NEU will meet with the FDA for feedback on NNZ 2591 for PMS. If positive, then the Ph 3 trial will likely take a little less than two years. So it will be a slow grind – with lots of periods for investors to become alternatively bored and nervous.  

However NEU has a number of further attributes in its favour which the market seems to be losing sight of:

-            NEU have $240m in the bank and no debt. NEU have enough funds undertake the PMS and PTHS Phase 3 trials themselves.  As a scale example of what might be needed should they choose to do so, Arcadia have around 50 staff working on the whole Daybue enterprise.  

-           they have ongoing royalty revenue from Daybue in the US. (It may be less than many investors expected -  however at around say $50m/yr is way more than most smaller drug companies have).

-           The RoW Daybue rights have been competitively bid and won by Acadia, on better terms for NEU. It is possible with a few things going right, NEU might see in two to three years similar royalty revenue from  RoW sales.   

-           John Pilcher and NEU has done it all before with Rhetts syndrome.   Admittedly Arcadia carried the later stages - but NEU understands how to engage with the FDA, the Community Groups and know the US distribution and reimbursement landscape.    These are not first-timers who are whispering sweet nothings in your ear. They have done it before.  

-           The PMS results at Ph2 were better than Trefinitide /Rhetts at the same development juncture.

-           The CEO John Pilcher is smart, dogged, honest and knows his way around.

-           NNZ2591 does not suffer from the major clinical handicap of Daybue - NNZ2591 has no reported diarrhea side effects.  

Likely NEU is either going to be bought out or in around two years time, with a little luck, you might find yourself up two or three times on your money. But who really knows.