ASX health stocks: Neuren soars 30% in early Christmas present after Phase 2 trial success

Neuren reports Phase 2 trial shows significant improvements in Phelan-McDermid syndrome
Improvements consistently seen across clinically important aspects of Phelan-McDermid syndrome
For 10 out of 14 efficacy endpoints, improvement from baseline on overall/total scores was statistically significant

Christmas has come early for market darling of the ASX biotech sector for 2023 Neuren Pharmaceuticals (ASX:NEU) which has soared ~30% in morning trade after announcing positive results of its Phase 2 results of NNZ-2591 in children with Phelan-McDermid syndrome (PMS).

In its announcement NEU says significant improvement was observed by both clinicians and caregivers from treatment, across multiple efficacy measures.

The open label Phase 2 trial in children aged three to 12 years was conducted at four hospitals in the US and with primary endpoints safety, tolerability, pharmacokinetics and efficacy over 13 weeks of treatment with NNZ-2591.

Secondary endpoints included 14 efficacy measures assessed by clinicians and by caregivers. Efficacy measures included global measures assessing overall change, measures assessing specific symptom areas and measures assessing quality of life.

The trial kicked off with at least four weeks of screening and observation to thoroughly examine baseline characteristics prior to treatment, followed by the treatment period of 13 weeks.

A follow-up assessment was made two weeks after the end of treatment. NEU says 23 children were screened, five failed screening and 18 entered the study with the mean age was 8.6 years.

NNZ-2591 was given to all patients in the studay as an oral liquid dose twice daily, with escalation in two stages up to the target dose of 12mg/kg during the first six weeks of treatment, subject to independent review of safety and tolerability data.

Improvements seen across core PMS characteristics

Significant improvement was assessed by both clinicians and caregivers across clinically important aspects of Phelan-McDermid syndrome, including communication, behaviour, cognition/learning and socialisation.

NEU says clinician and caregiver global efficacy measures showed a level of improvement typically considered clinically meaningful including:

Global Impression of Improvement (CGI-I ) – mean score of 2.4, with 16 out of 18 children showing improvement assessed by clinicians
Caregiver Overall Impression of Change (CIC) – mean score of 2.7, with 15 out of 18 children showing improvement assessed by caregivers
For 10 out of 14 efficacy endpoints, improvement from baseline on overall/total scores was statistically significant (Wilcoxon signed rank test p<0.05)

NEU says NNZ-2591 was safe and well tolerated, with no clinically significant changes in laboratory values or other safety parameters during treatment.

PMS is a serious neurological disorder that emerges in early childhood and has severe quality of life impacts for those living with the syndrome, as well as parents and siblings.

There are currently no approved treatments for PMS despite its severely debilitating impact.

ASX biotech darling of 2023

NEU has been one of the favourites biotech stocks of the ASX in 2023 after large pharma partner Acadia (NASDAQ:ACAD) announced in March that the US Food and Drug Administration (FDA) had approved trofinetide, for the treatment of Rett syndrome.

Now dubbed DAYBUE, trofinetide is the first approved treatment for Rett syndrome with its official launch in the US by Acadia in April with its share price sending the stock soaring.

NEU was elevated to the S&P ASX 200 in the September re-balancing after rising more than 37% YTD.

However, the catalysts for the drug developer are not over yet. NEU is forecast to release topline results of its Phase 2 clinical trial of NNZ-2591 in Pitt Hopkins Q2 2024.

Apart from PMS, NEU’s Phase 2 trials on NNZ-2591 are focusing on three other serious neurological disorders emerging in early childhood, including Angelman, Prader-Willi Syndrome (PWS) and Pitt Hopkins syndromes.

All four programs have been granted Orphan Drug designation by the FDA, which grants tax credits for qualified clinical trials, exemptions from user fees and a potential seven years of market exclusivity after approval.

Welcome results for NEU and investors

CEO Jon Pilcher has been awaiting the results of the Phase 2 trial all year, telling Stockhead when trofinetide was approved that NNZ-2591 is even more valuable to the company.

He says they’re both involved in the biology of IGF-1 in the brain, which is growth factor critical for normal brain development and maintenance and the number of patients NEU was looking to target with NNZ-2591 is five times the patients of Retts syndrome.

“The strength and consistency of these results has exceeded our expectations and gives us high confidence as we strive to accelerate the development of a potential first therapy to address the overwhelming unmet medical need of PMS,” Pilcher says in today’s announcement.

“We are very grateful to all the people at the trial sites in the United States and in the PMS community who enabled this groundbreaking trial to be completed successfully.”

Analysts welcome results

Healthcare analysts have welcomed NEU’s latest results for the Phase 2 trial. Morgan’s senior healthcare analyst Scott Power told Stockhead the key focus here was safety, particularly the incidences of lower gastrointestinal events (~11% of patients) which were comfortably met.

“Looks like an outstanding result for NEU on its Phase 2 trial in Phelan–McDermid syndrome,” he says.

Power says the trial serves as compelling evidence that subsequent studies in Pitt Hopkins, Angelman, and Prader-Willi are likely to yield positive outcomes, given their status as related conditions with similar symptoms.

“There was significant improvement as assessed by both clinicians and caregivers across many measures,” he says.

“This is the first of four Phase 2 trials underway (expected to read out over the next 12 months) and will give the market confidence that the other trials have a good chance of success.

“The company estimate the size of US market is 24,000 patients, more than twice the size of the Rett’s market and the market should respond positively to this news.”

Petra Capital healthcare analyst Tanushree Jain told Stockhead NNZ-2591 results did not have any safety issues as they expected and efficacy was really strong across multiple measures and consistent with strong p values “showing it’s not by chance and it’s robust”.

“It is much stronger results than any of the Daybue Rett results (Phase 2 or Phase 3) at a dose 20 times lower than Daybue,” she says.

“You can’t get better results to confidently go into Phase 3 and we would be expecting this will garner significant attention from industry/potential partners,” she says.