Neuren Pharmaceuticals (NEU: $14.20) announced this week a significant expansion of its partnership with US biopharmaceutical company Acadia Pharmaceuticals (NASDAQ: ACAD). The agreement not only sees Acadia's exclusive licence for trofinetide in North America expand to a worldwide licence, but also Acadia's acquisition of the exclusive worldwide licence for NNZ-2591 in Rett Syndrome and Fragile X Syndrome.
Importantly, it leaves Neuren with rights to commercialise NNZ-2591 for the four indications for which Phase II studies are currently underway by Neuren. Neuren is precluded from developing NNZ-2591 or any other compound in North America for an indication in which Acadia develops trofinetide, excluding Phelan-McDermid, Pitt Hopkins, Angelman, and Prader-Willi syndromes. This ensures that NEU's four Phase II clinical trials featuring NNZ-2591 will continue to advance as planned.
Neuren CEO John Pilcher said this deal removes the remote risk (of obstruction) to Neuren for its four prized indications with NNZ-2591 (with Neuren previously not able to develop NNZ-2591 in North America for indications that Acadia pursues with trofinetide).
The new deal between the two companies will see Neuren receive a US$100M up-front payment, following the US$40M up-front payment received for the North American licence. The milestone payments for the new deal include US$35M for the first commercial sale of trofinetide for Rett syndrome in Europe, and US$15M for the first commercial sale in Japan. In total the company stands to earn up to US$427M in milestone payments.
Tiered royalties for trofinetide are higher for the rest of the world, ranging from the mid-teens to low twenties. The global payments related to NNZ-2591 are identical to the global payments for trofinetide. European trials with trofinetide to gain approval for Rett syndrome are not expected to be required according to Pilcher.
DAYBUE Launch Progress
Acadia has reported that the launch of DAYBUE is going "according to plan". DAYBUE Q2 preliminary net sales were US$23M following its launch in April, with Q3 net sales guidance set as high as $55M. Acadia CEO, Steve Davis, has reported that the prevalent population is "adopting [DAYBUE] faster than expected" and that "demand has exceeded [their] plan".
Acadia's initial strategy was to focus on converting clinical trial patients to customers. To date more than 90% of clinical trial patients have been converted. The company then shifted its focus to high-volume treatment centres and community centres. The initial clinical trial patients now make up a minority of patients on commercial drug treatment.
Acadia COO Brendan Teehan reported that the company has established a "comprehensive support system for patients,
caregivers, and providers" to "set the appropriate clinical benefit and treatment management expectations with physicians and families to ensure the optimal initiation and treatment journey for the patient". A large sales footprint is not required to sell DAYBUE said Pilcher, with the US market expected to function as a blueprint for commercialising the drug throughout the rest of the world.
Continued support for patients is particularly valuable as the drug may be one that patients will need to be on "for the long haul" according to Acadia.
Being a treatment for such a rare disease, DAYBUE's launch has not been completely seamless. Reimbursement has been somewhat of a barrier, with only 20% of covered lives having a formal written policy. Acadia has also acknowledged that certain payor plans may never have a formal written policy for Rett syndrome, relying exclusively on the medical exception rule. Most patients on the therapy today have been given access through a letter of medical necessity. Acadia is continuing to work alongside payors to rectify the issue.
Not only have most patients only had one or two scripts filled, but physicians are recommending that patients titrate up from the prescribed dose. This ultimately means that future compliance rates, prescription refill rates, dose per patient, and persistence are uncertain, making it difficult to predict future sales of DAYBUE at present.
Acadia intends to pursue regulatory approval of trofinetide in Europe while advancing its own clinical pipeline, which includes a Phase III trial of ACP-101, a treatment for Prader-Willi syndrome and a potential competitor to Neuren's NNZ-2591 in the indication. CSO Dr. Kathie Bishop notes that while there is no current data, the two compounds might be "synergistic".
Acadia's other drug, Nuplazid, is expected to generate net sales of approximately US$530M for the year. The company is well funded, with a cash position of US$275M after payments to Neuren are accounted for.
Summary
Whilst Neuren had multiple partnering options for rest-of-world rights for trofinetide, assigning global rights to Acadia provides a less complicated, cleaner structure removing any potential restrictions for Neuren around the NNZ-2591 commercialisation pathway for the US market. Acadia has also shown to be an excellent and reputable partner to date.
Following receipt of the US$100 million payment from Acadia, Neuren will have $226 million in cash, including payment of the US 5% withholding tax. Neuren is capitalised at $1.8 billion.
Bioshares recommendation: Accumulate
Neuren CEO John Pilcher will be presenting at next week’s Bioshares Biotech Summit in Hobart.
