Neuren Pharmaceuticals Limited (NEU) Earnings Call Transcript & Summary

There is no deadline, but we are working closely with the FDA to progress this as rapidly as possible.

And I think just to echo what both I and Liza said, we've had a very collaborative approach from the FDA so far. So we certainly hope that's going to continue in this extra piece that we have to do. Next question is the same one. When can we expect an update or disclosure of pre-clinical results of undisclosed indications? I think I've answered that one. Next question, how much money will you need to complete this Phase III on your own? So I think it's already -- the range has already been talked about. So that's the sort of range, I think we're talking about. Of course, we have more than -- a lot more than $200 million in the bank currently. So we're very well-funded to do it. Are there any external organizations willing to partner? Again, I think I've answered that in a previous question. Congratulations for the constructive end of Phase II meeting. Thank you. You promised at the last conference call that you're going to give more details about the interest of big pharma in NNZ-2591 or Neuren. So I think, again, that's aimed at takeover or partnering, and I think I've answered both of those things. Right. That's all the pre-submitted questions. So move on to others. So what are the important announcements to look forward to until the end of 2024 and in 2025? So yes, there's an awful lot happening. So -- and some of them we've talked about already. Obviously, there will be the agreement with FDA on the efficacy endpoints, which will allow us to then put more information on timelines and costs. There is the new indications that we've already been talked about in Q&A. Acadia will give their next quarterly update in November, which should be very important for DAYBUE. And of course, into 2025, there will then be quarterly updates on those sales. Also, we may well get a decision from Canada for DAYBUE, hopefully, an approval decision from Canada before the end of the year. And then Acadia has said that they expect to file the application for DAYBUE in Europe in the first quarter of next year. So again, that will be an important announcement. And then, of course, we have our other indications with 2591 that we will certainly be having dialogue with FDA on those indications at some point. So there will be news about that, too. So a huge amount happening both in the last 3 months of this year and into next year. Next question. Can you provide more color on the number of patients you expect to enroll? I'm not going to do that because we really need those endpoints confirmed before we can do that. I mean all I will say is that I've obviously referred in the past to the -- for Rett syndrome, it was 180. So we're not talking about hundreds of patients here, but it's a relatively small trial, which is one good reason why we're very capable of executing it. But again, I'll give color on that number of patients when we get agreement on the endpoints. Next question, is there an approximate time when the agreed endpoints will be known? I think Liza has answered that. There isn't a prescribed time, but we will move as quickly as possible and I hope the FDA will do likewise. Are there any changes to manufacturing suppliers of 2591 between Phase II and Phase III? So yes, there are, but that's all been done some time ago. So we did move the Phase III to bigger manufacturers that could be the commercial manufacturers. Of course, you have to test your commercial products in Phase III made with the commercial process. So we did change suppliers. But as I said, that's some time ago. There been a lot of work been going on this year in that regard, and we're well into the manufacturing campaign to make the product at the new manufacturers who could be the commercial manufacturers for the Phase III trial. So we feel very confident about that. Next question, how many trial participants will there be? I think I just answered that one. Could you provide an update on any discussions you have had or not had with FDA regarding additional undisclosed indications? So there haven't been any because there can't be any until, as I said, we've got the pre-clinical results and we've confirmed our patent position, then we would go -- will tell you all first and then we would go to FDA to have those discussions. Next question, what is the timeframe on hearing back from FDA on endpoints? I think, again, Liza has answered that. Can you confirm if the additional data to be submitted is already available? Any guidance on how long it will take to assemble such data? Slightly different angle on that question. Liza, do you want to make a comment on that, particularly about the additional data?

So the additional data is being assembled and analyzed so that we still have some work to do. But as you can imagine, this is a bit of an iterative process, but we're moving again. I just have to stress we're moving as rapidly as possible.

And I think part of the question was just saying, is this information already available. So yes, it's important to say this is -- we haven't got to do other studies or generate other information. The information is available. We've just got to compile it and submit it. Next question. In fact, there's a few questions in this one. How is the preparation work going for Pitt Hopkins? Any indication when the end of Phase II meeting will take place? So look, I always said that this -- the feedback we got on Phelan-McDermid would be instructive for Pitt Hopkins because it's the same division of FDA, and we're in a very similar situation. There's no precedent at all here. So the breaking new ground is exactly the same with Hopkins. So I think it's all the information we've got and everything that we've aligned with FDA, I think, is really useful and really relevant for Pitt Hopkins. We haven't fixed an end of Phase II meeting yet. So I don't have any time for you on that. We'll let you know in due course. Second question, the share price has been disappointing year-to-date. And in fact, it's one of the worst performance on ASX 200 in the context of broad positive market. Market does not seem to buy into the NNZ-2591 story. What's your view on this? So I don't think it's anything to do with NNZ-2591. I think it's completely to do with DAYBUE, and maybe I'll come back to that in a second. Obviously, extremely unhappy with the share price this year. I would point out that we were the best-performing stock on the ASX 200 last year. So I think you need to view this in a longer-term context, but I won't shy away from them, incredibly disappointed this year. I do think it's completely to do with DAYBUE. It's very clear that some shareholders sold leading into Acadia's announcement where they downgraded their sales guidance and continue to sell after that. And if you have multiple institutions selling at the same time, then it drops the price in whatever situation you're in. And I think that has changed sentiment. And remember, it came on the back of a short report, which was complete rubbish, but still sewed the seed of doubt in people's minds. So I just feel that the sentiment on DAYBUE has changed in that period. That's why 2591 is so important. It's not all about DAYBUE, and I've always said that. The big value opportunity in the future is 2591, and it is a much bigger opportunity than DAYBUE. Having said that, with DAYBUE, I think, we're very encouraged by all the metrics that Acadia has put out both in the last quarter and since. And so we're very hopeful that what is a great story still from a sales point of view will continue to build in the future, and we think there's a hell of a lot of upside and of course, other territories to come on stream. So there's a huge amount left in the DAYBUE story. But for me, that's what's causing the share price to be worried of, it's not about 2591. And certainly, that's what I hear from people. Third part of the same question. While it's good to see the buying from one director as a shareholder, it would be more positive if more management members and directors buy on market given where the share price is. So look, completely entitled to that view. If you think it's going to influence the share price, you can't keep doing it. You can't keep having directors continually buying and they're never allowed to sell. I mean that's not a tenable situation. So in the end, it's an individual decision for every shareholder. We've got big shareholdings, certainly some of us have got very big shareholdings now. I don't really see any need to add to them. I don't think we should be trying to manipulate the share price. Next question, what about the number of participants in Phase III? I think we've answered that one. What is the timeline for the next meeting with FDA about endpoints? So we don't think we necessarily need a meeting. We need correspondence, and that's what Liza has talked about us doing as soon as we can. Regarding PMS, would it be fair to assume for a trial like this patient number would be more in the less than 50 range rather than hundreds? No, that's not right. So for a Phase III trial, that would be incredibly unusual, and that's because it's not just about efficacy, it's about safety. FDA want to see a certain number of patients having exposure to drug for a certain length of time and want to be confident about the safety profile. So no, it will certainly be more than 100. How many more, as I said, to be determined once we've fixed the endpoints. Can you provide an update on [ where to ] for Pitt Hopkins following the positive Phase II results in that syndrome? I think I've answered that one. Maybe just to add again, we think there's a great opportunity there and feel very good about it, but we'll have to go through the same journey with the FDA. What is the anticipated start date of the Phase III trial? As I said, I'm not going to talk about detailed timelines today, we'll do that as soon as we have agreement on the endpoints. And then one -- it's not a final question. There are more, sorry. What details can be provided on the manufacturing of NNZ-2591 for the Phase III trial in preparations for a commercialized stage? So I've talked about that a bit. As I said, we're well into the manufacturing for the Phase III trial. Obviously, it's a campaign that runs for a period, and we'll manufacture more as the trial continues, but we're very comfortable with where it's sitting. And as I've said, the manufacturers we're using are capable of being commercial manufacturers. It's making the drug with the commercial process. So we'll be ready to make registration batches when that time comes. What is the estimated timeframe as to Neuren submitting all the required info to FDA on primary endpoints and how long it will take for them to respond? So I think it's the same question that we've already answered. Thanks for the update. It's appreciated. Can I just confirm if the previous $50 million to $100 million guide is in U.S. dollars or Australian dollars? So that's U.S. dollars. I've always said U.S. dollars. How many patients will be in the Phelan-McDermid syndrome trial? I talked about that. Do the sites all have to be in the U.S.A.? Liza, you've touched on this. Do you want to just make a brief comment about that?

Sure. So currently, we're identifying sites in the United States. But obviously, we are open to potentially exploring other sites in the future depending on the need.

How long will it take to manufacture the drug for Phase III trial? So I've talked about that. Well, maybe the extra thing I'll say is, currently, manufacturing is not on the critical path. We're going to be comfortably ready to start the trial. There is an interesting question. Does the meeting with the FDA materially change your view on the future of the company? Look, it greatly increases my confidence. As I said in my opening remarks, we're taking a pretty aggressive approach here in an area where there's been nothing for either us or the agency. So I'm actually really, really pleased with the outcome and feel very positive about the future and about the strategy that we've laid out. I think we're in a very good position to execute it. Is it reasonable to expect the outcome from FDA on primary endpoints by the end of the calendar year? So Liza has talked about this. I personally hope that we may be able to do that, but we can't commit to that because it's dependent on the FDA coming back to us. Are you happy with how things are going? And how is your energy. I must be looking a bit tired here. Great job from us, all well done so far. So thanks for that. Yes, as I said, I think it's funny when you go to these FDA meetings, you tend to be very excited, given how important they are, but you are also nervous because things can come from left field and often do. And it's just very important. So as I said, we're really happy now to be past that and have got such a good outcome. So yes, I'm feeling good, and I think all the management team is as well, and we're incredibly motivated to execute what we've got in front of us. We said before, once you deal with these patient communities, you've got massive motivation to do something and Phelan-McDermid syndrome is no different. Teams had a lot of interaction now with the community and FDA gets that as well. So we've all got a lot of energy to get this done. Has any consideration been given to a share buyback or paying a dividend, however small to bolster market interest in share price? So we've talked about this before. We're constantly reviewing that. I've said before, I'm certainly not in favor of special one-off dividends. I've been involved in a situation like that before, which did not have a good outcome. I think it should just come off the share price. I mean that's what should happen. So that's a different thing to ongoing dividends, but you need ongoing franking credits. We've got to recover the R&D tax incentive before we have franking credits. So again, we're not in a position to do that yet. So I think that leaves share buyback. We're certainly keeping that under consideration whole time, and we'll continue to do so. Share buyback, same question. I agree that sentiment of DAYBUE has shifted and weight on the share price, even though the actual data is quite good. How do you shift the sentiment? So yes, I mean, thanks for that question. And I agree with you, the outcome, the run rate for sales more than $300 million per annum in such a short time is a fantastic outcome. But unfortunately, expectations have been built hugely before that and have then been disappointed. So -- but I think the outcome is great. As for how we shift the sentiment, I don't think we can really. I think it's Acadia that can do that, and they can do that by execution and delivering. And I have every confidence they'll do whatever they can to do that. And again, as I said, I don't want to sound like it's a disappointing outcome. It's not. It's a great outcome. So I think the further they get into the launch, the more experience they have, and I think the better indication about the future they can give. Is there any progress on other developments? I mean I presume that's talking about new indications for 2591, which we've talked about. And I guess Pitt Hopkins, we've talked about a little as well. Your net cash balance with continued flows coming in with no associated costs from Acadia is solid. It seems to me that even at USD 100 million for Phase III PMS, your cash position is incredibly robust and doesn't seem to be an issue, increasingly so. My question is, would you consider a buyback at these levels? So yes, again, absolutely, we would, and we are and we'll continue to do so. And you're right, it's not just about the current cash balance. I mean we have a lot of money coming from DAYBUE. We're almost certain to earn the $250 million sales threshold milestone this year, which is a USD 50 million milestone payment, which we would receive in the first quarter of next year, which is another news item that I didn't touch on earlier in the other question. So absolutely, we've got a great position. Remember, though, we've got Pitt Hopkins we want to execute. We've got potentially new indications as well. So it's not just about the Phase III PMS cost. But absolutely, we're considering buyback and we will continue to do so. How long did Rett Phase III recruitment take? And do you expect similar? So I've said before that start to result, so that takes in both recruitment and the 12-week treatment period for Rett was about 2 years. Again, it's going to depend on the number of patients we end up with, which depends on the endpoint outcome. But my current expectation is that I hope it will be something similar, and I will update on that in due course. Any plans on capital management if the endpoint agreement with FDA is favorable. So again, I've talked about that. I guess that does introduce an extra thing though that -- I'm saying I can't update on the detailed cost yet. Of course, that impacts the cost profile going forward. So there's no doubt that having that agreement with FDA would be an additional data point in the favor, but we're still considering it in the meantime anyway. Why couldn't the endpoints be agreed with at the meeting? Well, look, I hope you heard my context at the start here that there's no precedent here and there's no RSBQ. So -- and also, if you remember back to our results, for this Phase II trial, we had a lot of endpoints that were positive. So a lot of range of options, but most of them are not Phelan-McDermid syndrome endpoints. So you've got this -- that situation going into the meeting. So there was a lot of discussion about a number of different options. And in the end, I think we did reach provisional alignment on something, but FDA is not prepared to confirm that without supplying additional information. So again, I'd just say if you're thinking back to the Rett experience, it was quite different. There was the Rett Syndrome Behavior Questionnaire that we used in the Phase II trial, and we proposed to use in the Phase III trial, and it was a Rett endpoint. So it was a quite different situation. But as I said, we've got a lot of endpoints that were positive in that Phase II trial, which is a good position to be in. And in fact, many more endpoints are positive compared with Rett where they were a very small number that were positive. What did Neuren propose for endpoints? Was it the same as the Phase II? So again, as I've said, I'm not going to go into specifics about the endpoints. All I will say is that, as I said, Phase II had lots of endpoints. If you go back and look at that announcement, you remember there were, I think we had something like 14 endpoints. So I think you can -- it would be obvious that we are [indiscernible] something around that Phase II endpoints, but I'm not going to go into detail of what it was. Do you feel Neuren will be in a position to receive a priority review voucher for 2591 in PMS? So yes, I do. We have the rare pediatric disease designation that you need. My understanding of the situation in the U.S. on the program is that the House of Representatives has passed the legislation that renews the program. It still needs to be passed by the Senate. So I think in the meantime, they've shifted the end date forward to December to give time for the Senate to ratify that. But I'm very confident the program is going to continue and that we should be able to get one given we have the designation. Because of the very short notice given for this webinar, I missed the earlier part, will you please place a recording of this, including Q&A on the website. So yes, we will, as we usually do. And I'm sorry about the short notice, unfortunately, that's -- we have to get the announcement out and thought we should do the webinar this morning rather than this afternoon. So -- but anyway, we will put a recording on the website. Completely different question here. Have you liaised with the new CEO of Acadia? So look, I haven't directly yet. We are liaising with lots of parts of Acadia and lots of parts of Neuren all the time. So we've had -- certainly had dialogue on things with various people since the change of CEO. I haven't spoken with the new CEO yet, which doesn't surprise me at all. She's got a huge amount on her plate internally, and that's where I'd expect her to be focusing. So I expect I will speak with her in due course, but I haven't yet. Similar question. On this recent trip to the U.S., did you meet the new Acadia CEO? I actually wasn't in the U.S. when that change happened. I was in the U.S. prior to that. When will Acadia monetize their priority review voucher? And is the market value still approximately $100 million? So on the market value, while the latest one that was sold a few weeks ago sold for $150 million. That's quite different to the previous 5 that were $100 million. So difficult to know whether that's a shift in value or an outlier. I don't know when they will monetize it. It's always said it's completely up to them. They may have been waiting for this -- the legislation thing to play out in the U.S. but I don't have any control over the timing. All I'll say is we still consider it effectively a receivable for us. It's not on our balance sheet, but it's effectively receivable for us, 1/3 of the value whenever they do realize it. Okay. And in fact, we've got a few questions now about the new CEO at Acadia. Change in CEO at Acadia seems to have depressed their share price recently. Are investors worried that the quarterly sales up to September will not meet the previous optimism? Did you meet with Acadia and the new CEO during your recent U.S.A. visit? So there's a few things in there. I've already answered about meeting with the new CEO, did however, meet with other people from Acadia, but of course that was before the CEO change. Are investors worried? I presume you mean Acadia investors, I don't know that. I don't think so. I don't hear that, but I don't know that. And as for change in CEO depressing the share price, I mean, the share prices up and down are those sort of amounts all the time. So I don't think you can necessarily draw that conclusion. I think the new CEO has got a great profile and particularly a very strong commercial profile. So I would expect her to be laser-focused on making the most of the DAYBUE. Do you think the new CEO of Acadia is a driver to develop their NNZ-2591 rights? Fun enough, I just said she's got a very strong commercial profile, and I expect it to be laser focused on DAYBUE. I still think that will be the #1 priority. I don't know whether she will change any of their views about NNZ-2591. We'll see. Any thoughts on the rising short interest on the registry? Thanks again. So look, having short -- shares sold short, unfortunately, is just a common feature of being in the ASX 200. I don't think the amount of short sales is anything unusual compared with other ASX 200 companies. So I don't think it's a cause for concern. I'd rather it wasn't there, but I don't see it as a cause of concern. Can you indicate just how the lab trials for other diseases are going when will the results be given? So I certainly -- I'm sorry, I can't give you any interim -- any data. I've already talked about, I'm hoping we'll have something by the end of the year or early next year. Did Neuren apply for breakthrough therapy? I'm not going to answer that. I'd have to be announcing that, but as answering that -- so sorry, I'm not going to answer that. What is the long-term strategy for Neuren? Do we have a vision to become a big pharma? To become a big pharma. What I've said is the huge value opportunity here is Phase III for 2591, right? So the question is, how much of that do you want to capture? Do you want to capture it all or the majority of it? Or do you want to capture a small slice of it and let someone else take over now? That's what I've talked about in the past. And I said for us, with all the experience we've got now and all the cash that we've got that I think capturing most of the value is the best outcome for shareholders. I still believe that. Now that doesn't necessarily mean you're going to become a big pharma. I mean there's another step beyond that, which is commercializing the drug. That's a much bigger step. For us, going from Phase II trials to a small Phase III trial is a pretty small step, and we're very confident about our ability to execute that. But becoming a commercial company that's going to sell a product is a whole different ball game. That would be a complete change to the company and probably a shift to the U.S. to do that. So that's not currently our strategy, but it is an option in the future. If shareholders wanted that option, that's an option in the future that you can make during Phase III, a decision you can make during Phase III if you want to. So I think for now, as I said, the strategy is to make as much value as we can out of 2591 for shareholders at the same time, delivering it to patients. And while we're doing that, we're going to be completely open the whole time to discussions with other companies about partnerships or whatever form, if they can deliver the sort of value that we're going to get from that Phase III uplift. Question, I hear that Acadia will want to launch a Phase II/III in Rett with 2591. I don't know where you've heard that. I haven't heard that from anyone who'd know that. I can't say anything about 2591 in Rett until and unless Acadia do. So I'm sorry, you're going to have to wait for them to talk about that. Sorry, we're at 45 minutes, we'll finish very soon. There's a couple of questions left. Why is our share price so undervalued compared to market analyst reports? So I've already given my view earlier on. I think sentiment on DAYBUE is what has caused it to be where it is today. And interesting, the market analyst valuations have not really shifted much. They came down a little bit with that sales guidance change, but not much, which just shows, I think, that the impact on the share price is way over done compared to the impact on the fundamental value of the company. But I feel it's a sentiment and a momentum thing, and I think it can shift and it can shift quickly when it does. If we are focusing on orphan indications for 2591, why did we seek a patent on autism? Don't disagree with the move, but just curious as to the rationale. So look, you always want the best intellectual property coverage you can have on all your products. And of course, if someone is seeking to use 2591 in autism, then it's important to have a patent that means that you protect that. If we were ever going to branch out of orphan indications in the future, then autism is an interesting one, albeit a very challenging one. So -- but mainly, it's just making sure you have the best patent coverage you can for your drug. Last question, do you ever read the HotCopper threads? Yes, I do. I'm interested to see feedback from shareholders whoever they are and whatever it comes from. So I do. I don't obsess over it, but I do read them and there's often some useful information. Okay. We finally -- no, we haven't finally reached the end. another one being added on. Right. This is the last one. I'm going to call it time after this. Is there any effort being put in to improve the digestion of the drug? So I'm guessing this is about DAYBUE because with 2591, talked about that this morning, but you remember from all the results from all the trials, there are no GI side effects appearing here. It's very different to DAYBUE. So you don't have that issue with 2591. If you're talking about DAYBUE, then again, it's Acadia, it's not us. It's up to them. I'm sure they're doing everything they possibly can to improve the profile of the drug. We can't say any more than that. So finally, we reached the end. So thanks for sticking with us, if you all have. So that's longer than I meant to run, but I tried to answer all the questions. Thanks for participating and for everyone for joining again. I'll just reiterate, we're really [indiscernible] a very challenging meeting. We've got some work to do to nail down this final bit. We're looking forward to that, and then we can get into the trial. So thanks very much. See you next time.