Company Interview / Neuren Pharmaceuticals upbeat on DAYBUE sales

Key points:

Neuren Pharmaceuticals (ASX: NEU) sees a dramatic profit drop but a significant rise in royalty income and US net salesExpansion plans are underway, targeting markets in Canada, Europe, and JapanAdvancements in NZ2591 show promising potential for treating neurodevelopmental disorders

Gerry Zhao from Neuren Pharmaceuticals discusses the company’s financial results. Neuren reports a significant 83% drop in profit to $8 million for the first half of the year. However, royalty income increases to $24.3 million, and net sales for its Rett syndrome medication in the US surged by 600%, reaching $161 million USD.

Gerry underscores the company’s optimistic outlook for DAYBUE, projecting full-year revenue between $132 and $138 million. He highlights Acadia’s efforts to expand the medication’s market, seeking regulatory approval in Canada, Europe, and Japan. This global expansion aims to solidify Neuren's revenue base further.

On the R&D front, Gerry reveals advancements in their second drug, NZ2591. With three successful Phase II trials, Neuren is prepared to push towards Phase III, targeting rare neurodevelopmental disorders. He mentions the company's ability to fund these trials, thanks to solid financial foundations from Debut.

Full unedited transcript below:

0:11

Let's move on with some other results. Neuron pharmaceuticals, reporting an 83% drop in profit to $8 million in the first half of the year. Royalty income coming in at 24.3 million. That's up three and a half from 3.5 million in the same period last year. Net sales in the US for its Rett syndrome medication debut, coming in at 161 million USD. That's a 600% jump. And its US partner, Acadia is taking the medication outside the country to Canada, Europe and Japan, where it's seeking regulatory approval. The pharma company expects its full year revenue from the medication to come in at between 132 and $138 million. No dividend has been issued. Let's get some further detail now on those numbers and what's ahead for new Vice President Jerry Zell. Joining us now, Jerry, good to have you on the show. Thanks for joining us here at Oz Biz. Look, this is this comes down to your to debut, doesn't it. Particularly those royalty

1:11

payments.

1:13

Yeah. So we we are a profitable biotech, which is a pretty rare um on the ASX. We have a commercial product debut. Uh, as you correctly said, it's, uh, currently selling in the US. It's launched last year and, uh, had a very successful launch and generate 170, um, million USD last year for, uh, for the partial year after launch. And this year, uh, we expected, uh, three between 340 to 3, 70 million of total sales. But that provides a very solid financial foundation for the company. And the our revenue base, uh, has two components. One is the royalty income, which is a percentage of the net sales. And the second component is the milestones. So in this year, in the second half, we expect to receive the first, uh, sales milestone of 50 million USD.

2:09

So you've seen that turnaround, uh, in profit. But uh, as we mentioned there. Certainly, uh, that's the the royalties off debut proving to be very lucrative for you. So what further growth can you can you see there particularly I guess, in North America, as we mentioned, but also just as far as entering those other markets.

2:31

Yeah. So the US, there's still a huge upside for the growth. Um, as we saw in the second quarter of Korea reported, the penetration has uh, has now reached about 30% of diagnosed patients. So they're still 70% to penetrate. And our the power of our revenue model is that as sales growth, our uh, percentage of uh, royalty rates also grows. So so that will bring further revenue upside for us in North America. And then in addition to that, we have we are entitled to up to 350 million USD of sales milestones. Uh, when we achieve certain sales thresholds. So that's the US alone. Uh, and then in addition to that, uh, Arcadia's, uh, actively working on expanding outside the US. Um. Firstly Canada. They have submitted the new drug application in Canada. And if everything goes smoothly, then we expect the approval potentially by the end of this year. And so that

3:31

revenue will added to the US sales numbers. And then outside the North America Europe. Uh Acadia has uh has submitted the Pip which is called paediatric investigation plan, which is a prerequisite for before the formal submission. And uh, now that has been accepted and the formal submission, uh, is expected to be first quarter next year and then Japan, they have to actively working with the regulator as well. So there are a lot more upside coming outside the US too.

4:04

Uh, how are you viewing those operating expenses at the moment? They were higher. So a lot of this obviously coming down to R&D, where is that tracking at the moment then? And are you happy with where it's sitting?

4:16

Yeah. So we are a drug development company. So although debut provides a very solid financial foundation for us to pursue the development we are currently doing our main, um, I'll join the crown is the second drug, which is and is a two from 91. And we are currently we had three successful phase two trials, uh, reported over the last eight months. And, uh, we are actively pushing, advancing that, accelerating the development work for that. Um, so the, uh, we, uh, plan to meet with the FDA in September to discuss the phase three plan for McDermid syndrome, which is the first indication, um, and, uh, we look forward to, uh, kick off phase three development in that indication as soon as we have agreement with FDA. So the so the R&D is primarily for, uh, completing those phase two studies, as well as ramping up preparations for the phase three. Um, so we we are very, uh, efficient

5:16

and link business. So you can see that our overhead corporate is very low and all our expenses are primarily associated with R&D. So we're very comfortable with that. And um, um, we have provided guidance to the market and uh, in the past, uh, we with our existing cash flow and existing cash in the bank, we accountably can fund two phase three trials. Yes. So you've announced positive phase two clinical trials there for a N and Z2591. Can you explain what you're seeking to treat here?

5:51

Yes, I am at 2591. It's a very exciting platform for us. We currently did we did phase two in Villa McDermid syndrome, get Hopkins syndrome and Angelman syndrome. These are all rare diseases, rare neurodevelopmental disorders caused by genetic mutations, although they are different, caused by different genetic mutations. But the commonality between those are the other. This connection in between the neuron cells in the brain. So we try to re-establish that connection. Therefore we can treat the whole disease regardless of the underlying genetics. And having three successful phase two trials in separate diseases really give us a confidence that this drug can potentially be applicable to many other neurodevelopmental disorders. And there are a lot out there.