Neuren Pharmaceuticals Ltd

ASX:NEU

Earnings Call Analysis

Neuren Financial Results Summary

Neuren had a remarkable financial year with a profit of AUD 157 million, driven by significant income streams including royalty, milestone payments from DAYBUE sales, and an expanded deal with Acadia. DAYBUE net sales for the year were USD 177 million, surpassing expectations. Guidance for 2024 indicates sales growth to USD 370-420 million, with expected royalty income of AUD 61-70 million. Milestone payments could reach USD 50 million, potentially boosting total revenue to $138 million. Beyond DAYBUE, Neuren's value is also fueled by trofinetide sales and Phase II trial results for NNZ-2591 across four indications.

Impressive Profit and Significant Cash Increase

Neuren Pharmaceuticals posted an exceptional financial year, highlighted by a transition from a cash position of $40 million to $229 million without any capital raising. This remarkable growth in cash reserves is credited to various forms of income, with all Acadia-related revenue contributing directly to pretax profits, furnishing the firm with formidable financial leverage.

Remarkable DAYBUE Net Sales Surpass Expectations

DAYBUE, Neuren's notable product commercialized in partnership with Acadia, achieved fourth-quarter sales of USD 87 million, reaching the upper end of projected figures. Significantly, DAYBUE's total sales for the partially elapsed year from April amounted to $177 million, surpassing initial anticipations handily. Acadia anticipates continued robust growth in 2024, with sales projections between USD 370 million and USD 420 million, despite some seasonality in the sales figures.

Royalty Income and Milestone Payments Set to Expand

Neuren forecasts royalty revenues between AUD 61 million and AUD 70 million for the following year, with royalty rates on sales ranging from 10% to 12%. Celebratory in their fiscal outlook, Neuren eyes the incoming first milestone payment of USD 50 million as sales exceed the $250 million mark, signifying an overall rise in the company's future revenues.

Multiple Avenues for Future Growth

The company's growth and value appreciation are attributed not just to DAYBUE's success in the U.S. but also to their strategic partnership with Acadia for trofinetide outside the U.S. and the results from Phase II trials across four indications for NNZ-2591, a key component of their development pipeline. Moreover, Neuren may benefit from a USD 33 million priority review voucher, subject to its utilization or sale by Acadia, contributing another potential stream of income in 2024.

Earnings Call Transcript 2023-Q4

[Gerry Zhao, executive]

Good afternoon. Welcome to Neuren's 2023 Financial Results Investor webinar. My name is Gerry Zhao, VP of Corporate Development at Neuren. Joining me on the call today from Neuren are Jon Pilcher, CEO; and Liza Squires, Chief Medical Officer. Jon will make the presentation, then all of us will be available for Q&A session following the presentation.

Before we start, I would like to remind everyone that we will be making forward-looking statements during today's call, which are subject to risks and uncertainties that may lead to different outcomes.

I'll now turn the call over to Jon to start the presentation.

[Jonathan Pilcher, executive]

Thank you, Gerry. Good afternoon, everyone. Thanks very much for making yourselves available late in the day. We wouldn't normally do this late in the day on the 29th of the 11th hour. I hope you understand that we had to wait for the Acadia fourth quarter report yesterday, which then had to go through to get our audited financial statements already. So that's why we've ended up doing it this late. So again, really appreciate your time.

So look, I know everyone is very interested in DAYBUE, obviously, given Acadia's announcements yesterday. But I just want to emphasize, we're not just about DAYBUE. So I'm certainly going to cover the whole of Neuren's business and what's been an outstanding year for us.

So I'm going to start with the financials and the headline obviously is a profit of AUD 157 million, and I'm going to step you through a waterfall of how we get actually beyond that from cash to cash. So we opened the year with $40 million of cash, and we closed it with $229 million of cash. And of course, we didn't do any capital raising.

So the way you get from one cash position to another, I'm just going to step through it, it's pretty simple. As you know, our financials are pretty simple. And I think this demonstrates what I've been saying for a while now is the fact that all the Acadia income goes straight to pretax profit just gives massive financial leverage, and you can certainly see it in this year's results.

So $27 million of royalty income. $59 million from the milestone payment on the first commercial sale of DAYBUE in the U.S., $146 million of income from the upfront of our expanded deal with Acadia that we executed during the year. We had just under $6 million of interest income, obviously assisted by the fact that rates moved sharply upwards.

We had other income of $2.5 million, which is mainly foreign exchange gains. That's actually offset -- if you look at the other expenses line, we've got $8.2 million there in there, there's an exchange loss of just over $2 million. So you can sort of contra those off, which leaves you with the corporate expense of about $6 million.

$27 million of R&D, and I'll come and talk about 2591 later on. So that's on the 4 Phase II trials that we're running and also that really important preparation that we're doing for Phase III.

Tax for the first time, of course, we've got a tax charge, so $48 million tax charge. We've actually paid quite a lot of that already because withholding tax in the U.S. on the moneys that Acadia pays us, there's about $18 million being withheld there. So we've got a tax liability of about $30 million.

So then you go to the noncash adjustments, $27.7 million, and really the main 2 components are the things I've just talked about, the fact that we've got a tax liability. That hasn't gone out of cash yet, but also the fourth quarter royalty. We have actually received it but not by the 31st of December. So again, that's noncash in 2023.

We then had $3.6 million coming into the company from the exercise of options, and that takes you to a $229 million of cash. So of course, that noncash adjustment number will come out of that as the royalty comes in and the tax goes out.

So I mean incredible year from a financial point of view has put us in a fundamentally different position, as you'll have heard me say before. By all measures, an incredibly successful year for us.

Let's just [ home ] in on the licensing income part of that. So DAYBUE net sales, as was announced yesterday, the fourth quarter sales came in at USD 87 million. Acadia had guided to $80 million to $87.5 million. So it was right at the top of their guidance. And if you look at the 3 quarters of sales that it's been, remembering the first quarter was not a full quarter then they met their guidance at the top in the first quarter. They beat it in the second quarter, and again, they made it at the top in the third quarter. So very consistent.

So total sales for the year, which a partial year from April, $177 million, fantastic outcome. I mean, really when we were thinking before they launched, I mean if you told me they were going to do that, I would have been really excited about NIM.

Now they gave guidance yesterday for this current year, 2024 of between USD 370 million and USD 420 million of sales. So again, massive growth from 2023. There's 1 important thing that everyone should understand is there's a little bit of seasonality in these numbers as they explained yesterday.

So December was flattened a little bit by the fact that people got refills early because of the holiday season coming. So the December number was a little bit inflated at the expense of the January number, about $3 million. And January is also impacted by the fact that a lot of the reps in dry centers of excellence didn't have clinic days during January. So the new patient starts in January were much lower than the previous months.

So that means January sales are lower than expected. And that means that the guidance for the first quarter next year is $76 million to $82 million. So it's actually lower than the fourth quarter this year. But the important thing is the number for the year, which as I said, $370 million to $420 million, which again is a fantastic outcome.

I mean we're in excess of the first hurdle for our $50 million milestone payments. I'll come on to in a second. So when I saw the numbers yesterday, I was very happy with the position and continue to be.

So let's move to the right-hand side of the page and then what does it mean for us? So the sort of royalty and milestone income. So growing royalty AUD 4 million, AUD 10 million, AUD 13 million for the 3 quarters of this year, and it will obviously be growing into next year. We're expecting between AUD 61 million and AUD 70 million of royalty next year. And of course, that's based on a royalty rate of 10% for some of the sales and then into the next tier, as I'll touch on in a minute of 12% for the remainder.

And then we expect to get the first milestone payments. The first sales milestone payment, USD 50 million comes when we hit $250 million of sales, obviously, miles above that in the guidance for next year. So that milestone payment plus the royalties would give us $138 million is the low point of our revenue next year.

So if you think about -- I'll just flip back to this chart, someone might say, well, this is a one-off. Well, actually, it's not because next year, the royalty is going to be even bigger to get the first sales milestone payment. And don't forget there's the priority review voucher share, which we don't have any control over the timing of, but it's possible that could come in 2024.

So just take a step back for a minute. Just remember, again, I said it's not all about DAYBUE. There are 3 elements that are driven our value to date and the rise in the value and they're going to drive the rise in the value in the future. It's the share of debut in the U.S. through the original Acadia deal, the share of trofinetide ex-U.S. through the expanded partnership, and then the third thing is this all important Phase II trial results across four indications for NNZ-2591. And we've obviously had the first result of those two in the year, which I'll come on to in a second.

So just going to quickly step through these 3. And in doing so, I'll give a little bit more color from the Acadia call yesterday on a couple of the points that they made.

So starting with DAYBUE in the U.S. So I've talked about the sales numbers. So again a reminder, USD 33 million in the priority review that a share that is due to us when they sell or use it. We're going into the second tier of royalties this current year. So the royalty for the 2024 will be a blend between 10% and 12% and that $50 million milestone payment comfortably in next year.

The other thing I'll point out on here is we now talk about currently identified patients of 5,000. It was very recently when it was 4,500 being talked about. So I think that's an indication that the total pool is growing.

As you know, Acadia's view of 6,000 to 9,000 is the potential here. We're all guessing as to what that number will end up and how quickly it will get there, but certainly already evidence of growth from the 4,500 to 5,000.

Some of the additional stuff that they gave us yesterday on the call and just pause for a second to say if you have the time, obviously, I really recommend to hear it from the horse's mouth. There's a recording of the call on the Acadia website. There are transcripts publicly available. Well worth your spending the time to listen if you've got that time. But I'll give you just a flavor of it.

So on the right hand side, real-world experience. I mean, you all know you've had great stories coming out of the community about the effects that are being seen in the girls and -- which is the most important thing, fantastic to see, and that's continuing.

On the left-hand side was something new, which Acadia has published this result from caregiver exit interviews from LILAC-2 the second open-label extension trial, which really does [ home ] in on exactly what things had improved and in how many kids from that study. And that's just really useful information.

I mean the right-hand side is brilliant, but scientists, families, everyone likes to see data coming out of trials. So I think that's really useful to have that stuff now to be able to refer to. And you can see as it's been all along this wide range of stuff, so it's communication moved, motor both gross motor and also fine motor and use a range of different things, which is what we expect from the drug.

Right. I'm going to spend a bit of time on this is the persistency because I know it's sort of a hot subject for everyone. So Acadia put out some very useful information yesterday, and they put it out in the fall of the table. We've actually represented it here a chart, but it's the same information. So let me just carefully step you through this.

And it's a dynamic situation because if you think about it, if you're looking at what's happened with patients who've been on the drug for 4 months, well, you've got a certain number of being on drug performance at one time. And then you've got others following behind you haven't been on for 4 months yet. And as time rolls on, they go into that 4-month bucket. And so the sample size increases. And that's the same thing all the way through a month, 4 months, 5 months, 6 months, 7. So these numbers are dynamic.

So what Acadia's try to show is how are these numbers changing as that dynamic happens. So in each of these months, the left-hand bar is a Lilac-1 experience. The original open-label trial, what was the persistence rate in that trial after each of these months worth of treatments?

The second bar on each, and you'll see there isn't the second bar for 2 of them, and that's because Acadia never reported it before, is what is Acadia said about the real world experience compared to the Lilac experience.

And then the third bar in each of these time points is what they said yesterday, so the right up-to-date real-world experience. And as I say, this is going to move on. These numbers will change as the sample size increases. And they'll also be able to add some on so they will be able to go beyond month 7 as we progress.

So the one -- one thing you can see, and they emphasize is yesterday is that the real-world experience is consistently tracking at, at least 10% better than the Lilac clinical trial experience. And you now talked about all the things that people are able to do in the real world. And all the support Acadia is giving to both physicians and families to try and help them stay on the drug. We know that the longer you stand the drug, the better the outcome you get. So consistently 10% better than the clinical trial experience.

The other thing that they said yesterday was of the people from LILAC-2 who rolled over into commercial drug, there have been 0 dropouts and those people have been on drug for I think, more than 2 years now. So that's very encouraging too.

Right. Let's move on to the second aspect of our value and that is outside North America. So again, a massive feature of this year, as you've seen from the financials was the expanded deal that we signed with Acadia in July, brought us USD 100 million upfront, as well as very attractive back-end economics, including tiered royalties from the mid-teens to the low 20s once they get to the market.

There was no new information yesterday. They gave this information at the JPMorgan conference in January, and we reported it then, but I'm going to reiterate it because it's still very important. So in Europe, they're engaging with the EMA, the regulatory source in the first quarter of this year, aiming to file a marketing authorization application in the first half of next year.

In Japan, they are engaging the regulatory agency this year. And Canada, which actually is not part of this deal. It's part of the North America deal. And in fact, we've commented on this slide, filing the new drug application in the first quarter of this year, with the potential for approval around the year-end 2024.

So it's great to see some lines in the sand, some real time lines there and this again, could have a big impact, albeit it's a little way into the future by the time they'll get to the market, but the economics we get from it are fantastic.

So that's DAYBUE. I now want to move on to the third part of our which is 2591, which as you well know, a high conviction, this can be worth a lot more to us than DAYBUE. And I think maybe people have lost sight of that yesterday, certainly.

So look, 4 programs moving along in parallel, potentially more than 5x the Rett syndrome opportunity. We've got outstanding results from that trial, the Phelan-McDermid trial that we announced in December. I'm going to quickly go over them again because it's so important in a second. And of course, I know you're all aware, top line results from the Pitt Hopkins and Angelman study are not far away. So Pitt Hopkins in Quarter 2, 2024. And Angelman Quarter 3 2024.

Prader-Willi, we're not giving any guidance on the top line results yet. We're not far enough into enrollment to be able to do that yet. We'll do that in due course. And those quarter guidance is, hopefully, we'll be able to narrow that down as we did with Phelan-McDermid syndrome as we get nearer to the day.

So that's the main game for 2009 from a value point of view, the thing we should all be most focused on. But there are a couple of potential upsides here. And one of them is obviously the fact that Acadia have Rett and Fragile X, 2591 and we get greater economics from that if they choose to develop it. It's their choice. I don't have an influence over that. But I think that's a very exciting potential upside for us if they decide to do that.

And then the second thing is that we've said all along, this broad mechanism of action, we think could be relevant for other indications. It's new developmental disorders that we are focusing on, but there certainly are others that we have in mind here.

So the Phase II trials, just quickly. I mean, just to remind you that the Pitt Hopkins, Angelman and Prader-Willi studies very similar to the Phelan-McDermid studies, really there any differences are the age ranges are broader in Pitt Hopkins and Angelman 3 to 17. The Angelman study, remember is in Australia, the others are all in the U.S. in some cases, it's slightly different endpoints, but it's the same approach of looking at multiple endpoints to select the right one for Phase III.

Really important. I mentioned the Phase III preparation early on. So we've been diligently executing the nonclinical tox studies that you have to do in order to be able to dose in Phase III and to open label extensions and then dose unlimited in the commercial setting. We've done all of those. We have been working very hard on optimizing both the drug product. That's the liquid drug product and the drug itself, the drug substance. Both those manufacturing processes to get to a point where we can make drug for Phase III under the commercial process. So a huge amount of work going in there, and we're getting ready to manufacture drug this year for Phase III. So very comfortable with where we've got to and all of that stuff.

So I now just want to reiterate that result in December because it got to be reviewing the year, then that was a massive part of the year and that came right at the end of it. As you know, we were incredibly excited about it. We had high hopes, but this comfortably exceeded those hopes.

So just a quick recap. Good safety profile, no issues there. I come on to the detail of that on the second one I make 1 particular point, but we're very happy with that safety profile that's come out. First time the drug was in patients. So it was very important.

And then on the efficacy side, perhaps more excitingly for everyone. It wasn't about a single p value. As you know, it was multiple endpoints, not against placebo but against baseline. So really important thing was the consistency and magnitude of the outcomes here and saw fantastic consistency between what clinicians and caregivers saw, and that was across multiple efficacy measures. And we saw consistent improvements across those efficacy measures, and they were on things that are important in Phelan-McDermid syndrome. So communication, behavior, learning and social behavior, really important things in Phelan-McDermid syndrome. They were the things out of everything that stood out and were consistently seen.

So I mentioned the safety profile. I just make one point. On the right-hand side, it shows you the adverse events that we've seen in the trial and doesn't need me to tell you, there's no profile of gastrointestinal issues here, no diarrhea with this drug. It's very obvious, which, of course, gives a big advantage compared with what we've seen with trofinetide so far.

On the efficacy side, if you remember 14 efficacy endpoints. I said it wasn't about 1 p-value, but the collective data here is very encouraging. 10 out of the 14 efficacy endpoints at a p value versus baseline of less than 0.05, which means there's a less than 5% probability of it being by chance. And the p values on many of the important endpoints were tiny with many magnitudes lower than that.

So again, a great outcome, but I'll just again point out the particular results on the CGI-I and the caregiver version of that. So if you remember, these were so strong, 16 out of 18 children showing improvement on the physician measure, 15 out of 18 on the caregiver measure, an average of 2.4 in the CGI-I, if you remember, the Rett syndrome Phase III trial had an average of 3.5 and a lower score is better. We had 2 patients in both measures that had one, which is pretty unusual, 8 of them had a 2 in the physician measures. So fantastic results on these endpoints and again, very consistent between the clinicians and the caregivers.

I won't go through this, but again, I wanted to put them up because there's the most important thing at the end of the day, again, what we saw out of this trial was so many encouraging comments from clinicians and caregivers about the stuff they saw in the trial in the kids. So there's a lot of excitement coming out of the trial, and we're very keen to get to the point where we can try and replicate that in Phase III.

And maybe before I just finish on the highlights, just to say again, our plan now is to prepare for an end of Phase II meeting on Phelan-McDermid syndrome on its own with the FDA, working very hard towards that now, to propose a registration program, and we expect to have that meeting about midyear, hopefully to get their support to go for a registration program on Phelan-McDermid syndrome.

In the meantime, of course, the Pitt Hopkins syndrome is going to read out and then Angelman. So we'll need to fold those into our plans as that happens. So -- but that's a fantastic problem to have, obviously, and we can't wait to that point where we can have a discussion with the FDA.

So I'm going to close just to leave time for Q&A. Just by reminding everyone of the highlights here. So again, it's not just about DAYBUE, but what a year we had, the first and only treatment for Rett Syndrome and the first treatment for neurodevelopmental disorders approved by the FDA and launched by Acadia in April.

They've done an exceptional job I think in every respect. Our economics from them, it's up to USD 1 billion plus 10% to low 20s percent royalties. The launch extremely successful. We've already had sales of USD 177 million in a partial year, and the first full year of sales guiding to $370 million to $420 million, and they've met their guidance every quarter so far. That's a fantastic outcome.

We're going as fast as we can to push these 4 indications for 2591 in parallel, and we got fantastic results for Phelan-McDermid syndrome is the first of them. As I've said, we've got the upside beyond that of potential in Rett and Fragile X and other indications that we may choose to pursue.

And then finally, $220 million of cash as I've shown how we got to that. So we're in such a strong position now. We've never been in a stronger position. And we've never had as good opportunities as we have ahead of us now. And so the team is so excited to this year. A great year last year, but I said all along, this is just as important with everything we've got ahead of us.

So thank you very much. I'm going to stop there and move to Q&A.

[Jonathan Pilcher, executive]

Now there's been a lot of questions submitted in advance, when I met you can do the opposite of what I've done in the past, I'm going to address the ones in advance first this time. And just a little warning, I mean there's a few questions in here that I've answered in the presentation. So I'm not going to answer them again. And there's also a few on a similar subject, which I may group together in the answers.

And then the final thing I just want to say is that if you're asking me for an extra information that Acadia hasn't given that it's confidential, then obviously, I'm not going to be able to give you on this call.

So let's start. So there's a question here. Acadia's call yesterday, they talked about the average age of DAYBUE take a sitting around 16 years of age. Are you of the average age of the girls are coming off the drug? Those who stay on typically younger.

So again, sorry, that falls into the camp of Acadia hasn't disclosed that information, so I can't comment on that, I'm afraid.

Okay. Right I've talked about the timetable. As a very general one here, what is Neuren's biggest challenge?

So I think for me, the biggest challenge is the huge amount of opportunity we've got ahead of us. So making sure we make the absolute best and optimize that is the biggest challenge ahead of us, but obviously, it's a fantastic challenge to have.

Please, can you step out how Acadia gets to the guidance in terms of volume of patients they expect to be on trofinetide by the end of financial year '24? And the persistence rate we should expect?

So look, again, I can't say more than Acadia said yesterday, but I can talk about what they said yesterday. So they've given a range of $370 million to $420 million. And what they've said is the middle of that range, is based on persistence rate continuing to be 10% better than the clinical trial rate. The compliance with the dose continuing to bear around the 75% to 80% range it is at the moment. And the number of new patients coming on to continue the current trend, if you ignore that seasonal thing that happened in January. And of course, if you flex any of those things, you can go up and down from the middle of the range. So sorry, that's not a precise answer to your question, but that's as much as I can tell you, and that's the information they gave yesterday.

Right. There's a couple of questions about the Culper research report, so I'll try and deal with them together.

There's one asking is Neuren or Acadia going to take an legal action against Culper for defamation and spreading unsubstantiated information just to manipulate the markets for their own personal motives being shorter. So all I will say is the report was not about Neuren and it was about Acadia. There's no mention of Neuren. So there's no basis for us to take any action. Whether Acadia does obviously is completely up to them. The one point I would make is that it's had far too much airtime given its lack of credibility already. So my feeling is it should be given no more airtime.

The second question about Culper was, do we plan to audit the specific information in the Culper port.

Again, I'd just say, for me, that report has got 0 credibility. They obviously got 0 credibility. As you've seen, by the way, it's been treated in the U.S., and it's pretty disappointing that it hasn't been treated the same way in Australia. So no, we don't really plan to do that.

If 2591 proves to be better tolerated than trofinetide, is it plausible? And how long would it take for Acadia to swap over? And is there any rationale for maintaining both?

So look, as I've said, it's completely in Acadia's decision making as to whether they pursue 2591 for Rett Syndrome. Now of course, we've just talked about the GI profile would be 1 reason potentially to do it, but it's completely up to them. But I do anticipate it's a new chemical entity, they would need to do another Phase III trial, I believe. So that was what they would need to be able to do before they get approval to launch. And as so whether there's rationale to maintain both, again, that really depends on their commercial strategy.

Right. There's probably 3 different questions, which are aimed around takeovers and I'm not going to say you currently take over talks. I'm not going to answer that. We're well aware of our disclosure obligations in that regard. There's another one about, can I expand on Jefferies role? You said at the time they're a corporate adviser. So they're there to advisers and older hands and all matters corporate. And then the third thing was a question about how do the Neuren Executive Board, it's a feeling about being sold or taken over.

And all I'll say is, I've said all along, we're agnostic to that. So what we want to get is the best outcome for all stakeholders here. Obviously, shareholders are a very big part of that. Patients are also there. And there are other stakeholders we need to get the best possible outcome for them. If it's that we can put agnostic to that, if it's not we're agnostic to it as well. And we're very aware of value being the key metric there.

Right. Any share buybacks on the cards at these prices? And I've also got a question, are we planning any dividends or buybacks?

Obviously, with that cash balance in mind, I guess, there's no point paying dividends. At the moment, we don't have franking credits until we paid tax. We're not going to pay tax for a little while yet. So certainly not going to pay dividends in the short term. Share buybacks, we are contemplating capital needs the whole time. But as I've said to you before, we have lot of information coming together in this half, including 2 more clinical trial results, the discussion with the FDA, talking to potential partners. So really, that's going to determine our capital needs. But again, we're keeping under review. If we decide that buyback is the right thing to do, then absolutely we'd do it.

Right. Did the Acadia forecast revenue for DAYBUE vary significantly from their previous forecast? And then the second part, Acadia referred to seasonality for lower sales in January, which I covered in the presentation, please expand do we expect ongoing seasonality size.

I think I have expanded on that. And I think there probably is a reason to believe that you would see that are ongoing each year. No reason to think that you wouldn't. So as for whether the forecast varied. So as I said, they've met their guidance every time so far. If you're talking about the 2024 guidance, they haven't made any guidance 2024 before. This is the first time. So it's not bearing from anything that made a forecast before. Obviously, analysts have made forecasts, both Acadia's analysts and our analysts made forecasts and that range is certainly in line broadly with what our analysts are saying.

Are you able to clarify Acadia's comments around patient numbers currently on DAYBUE in the U.S.?

And we've put that in the results announcement today. As I said yesterday about 860 is the current number, but they did mention 900 at the -- or actually, it wasn't 900, it was close to 900 at the end of 2023. So I think it was less than 200. I mean, obviously, as the patient numbers move, you've got new patients coming in and some going out. And as we said, during January, there was effective this hiatus in new patients coming in. So I think that's had an impact there. That's about as much as I can say on that.

Right. One -- so I think this is getting linked to Australia -- sorry, to Acadia, their share price has gone down half share it's come down. What does this signify going forward to the monetization of our other drugs? And how closely do you work with and respond to concerns by organizations representing patients in their uptake?

So, I mean just try and -- I'm not sure if I've interpreted this right, but so if you're asking do we as Neuren get involved in patients and the uptake for trofinetide? Then the answer is we don't. Acadia owns that product outright, but they are all over it. So they are doing that constantly the whole time, but it's certainly not our role to do that.

Now the flip side is, it's the complete opposite, NNZ-2591 and all our indications. Absolutely. That's our primary role, and we are working incredibly closely with them. So that's how it works. We're obviously linked to Acadia, the DAYBUE and our revenue is directly linked, but that's as far as it goes.

Acadia has an ongoing Phase III study for the treatment of hyperphagia in Prader-Willi syndrome. What's the impact to Neuren's Phase II trial?

So there is not a complete overlap in age range. So our age range starts at a younger age than Acadia's. You remember the whole theory here is we're not trying to treat hyperphagia. We're trying to treat the underlying neurological problem in Prader-Willi that results in lots of things, including hyperphagia. So our point of difference is that we're trying to treat the syndrome and the Holy Grail would be just treat early and stop hyperphagia being such a problem. But obviously, that's a long way off there, but that's how I point of difference is.

But the initial thing is, are we both running a trial at the same time?

Yes.

Is there going to be potential competition for enrollment?

Potentially, there's not a direct overlap in all the sites and the whole age range, but there will be some competition.

Right. This last one. So bad and good news of both seeing the share price drop recently. And actually, there's another question asking me directly about the share price fall yesterday, so I'll renounce them both together.

But the second part of this question is Neuren seems to be an unknown to many fund managers and the public. Why is management not more pro-active in promoting you into its shareholders and the public?

So I'll answer the second part of that first, then I'll come back to the share price movement. So respectfully, I disagree with that assessment. Always open to improving things, but all I can say to you is over the next 2 weeks, we've got, I think, more than 30 meetings. One-on-one with fund managers and calls with brokers in both Australia and New Zealand. And with overseas holders, we've got a massive amount of meetings. We've got I think 6 or 7 broker analysts covering us now, huge interest. So I think as far as accessing the investment community, and I just think that's not right.

If talking about the general public and advertising to the general public, well, again, we've had a lot of press in recent times. So I don't believe that that's holding us back. And I think the work we're doing with the investment community is the most important thing, albeit, as I said, should never be closed to improving things, and we'll certainly try and do that.

So let's just address the share price. Saying bad and good news are both seeing the share price drop recently. Well, for me, I think there have been 3 big movements in the share price. There was a big movement up in December off the back of the Phelan-McDermid syndrome result as they well should have been, and that was very rational and I was very pleased to see it, and it held very well after that. So that was the right result to good news.

We had a drop in the Culper report here. I've already made my opinion about that. Now in the answer to another question. So I don't think that was the right thing to have happened.

And then, of course, there was the impact yesterday, and Acadia overnight had a similar impact. So obviously, there is a constituent that didn't like what they responded -- what they reported yesterday. And I sort of feel in a way that's linked to the [ Culper thing ] because I do think there's been a bit of an atmosphere of people forensically looking for negatives rather than taking the -- what is a great story on face value. But -- the most important thing is the stuff to come, which we are very excited and very confident about. And as I said, reiterate, Acadia has done a fantastic job, and they've met everything that they said they were going to do.

Right. I think that's it for the pre-submitted question. Sorry, let me not -- I've answered one about the road map for NNZ-2591.

Sorry, there's one last one. Is there any public funding for this drug in the U.S.? Do you think public funding is needed to accelerate the commercialization of it?

So again, I presume it's talking about DAYBUE. So yes, there already is public funding. So Medicaid, the government program that covers kids. It covers about 60% of the Rett population. Acadia didn't put that in the announcement yesterday, but they've done it in all their previous announcements. They've reached 80% of the current Rett patients, whether they're covered by Medicaid or private health insurance, covered by payers with formal coverage policies in place. So that's, again, a fantastic outcome, so soon after launch. So that already has been addressed.

Okay. So it's all the pre-submitted questions. So let me just flip to the newly submitted. Right. First one, have you thought about providing R&D expenditure guidance given the upcoming intensity with 2591 trials?

So I think it's a fair question, but it's too early because we don't have a firm outcome yet on what the Phelan-McDermid syndrome program looks like, and what the other ones are going to look like and how much we're going to fund ourselves. So we will do that in due course, but we're not quite there yet.

What progress on PMS since the top line results? Or what can we expect in the next 3 to 6 months?

So again, as I said, the key milestone here is that end of Phase II meeting with FDA midyear massive amount of work going into preparation of that, consulting experts in many different areas, and you have to put a huge amount of information together to present to the FDA to support your plan. So there's a huge amount of work going on including some extra analysis such as PK, but it's really that -- that's the key thing is that the FDA meeting.

There's been a number of M&A activities globally in recent months. The comparable valuation is much higher than where Neuren is currently. Is the company open to any corporate activities right now or after more Phase II results? As a share, I don't believe the ASX would fully unfairly value in Neuren judging by the recent share price movement and the best option is through corporate activities, but also fast track potential treatment for the patients globally.

So again, it's completely entitled to that opinion, and it might be right. But as I said, we're agnostic to the outcome here. There are many things going on in the company at the moment. And that sort of play out is one of the possible options.

Can you please provide any update on Prader-Willi in [ Neuren ] when it will complete?

I already said, sorry, we're not going to do that yet. We need to get further into the trial before we do that.

What's your expectation on the DAYBUE peak sales in North America alone? Do you still believe there's a chance to crack $1 billion?

So I can't give you a peak sales forecast. I'm not allowed to do that. There are 6, 7 analysts covering us. So you can look at all of their models. I know they've all put a lot of science into those models, a lot of careful calculation based on good parameters. So that's the best thing you look at. I certainly think there's plenty of growth off into the future beyond this year, as Acadia said yesterday.

What would commercial success for NNZ-2591 look like for Neuren from patients on drug pricing and gross profit margin perspective?

So look, I'm going to answer this probably simplistically rather than forensically like that. I mean, the best success here would be if we get multiple indications approved and the pricing is in the ballpark of trofinetide. And either of its partner doing it, then we'll get economics like we do from Acadia, or if it's us doing it, we'll get gross margin. And we've got massive manufacturing advantages with 2591. The dose is way lower, no cold chain. So I'd expect an extremely attractive gross profit margin whoever does it. But that's as much as I'm going to say. I don't need to say, I've said, it'd be great to have 4 in the market. It doesn't need 4 in the market, obviously, to be a commercial success. Even 1 indication that a repeat of DAYBUE, obviously, will have a massive impact, but I'm certainly hopeful it will be more than that.

What is the latest feedback regarding insurers initiating treatment and continuing long term? Are there treatment hurdles for insurers to allow treatment continuation on longer-term scale?

So look, Acadia and others have said, there's a wide -- and again, a lot of our analysts have done work on this. There's a wide picture here as to what insurers are acquiring. There are certain hoops they have to get over to get treatment in the first place, including the diagnosis. I think many are acquiring -- requiring some information about efficacy but that's very variable. And obviously, that could come from the treating physician. So there is no one answer I can give you. But can Acadia -- it's not concerned about that.

Does Canada count in total sales for U.S. milestone payments?

Yes, it does. So the net sales for North America is U.S. plus calendar. If it hits $250 million in -- for example, in the third quarter, do you get the milestone payment in the fourth quarter or after the year has been completed. So it's when the year has been completed. So we would have -- if we've earned in 2024, which, of course, we expect to, we will -- it will be in our revenue for 2024. We would receive it early in 2025. So it works the same as the royalties.

Question about buyback, which I think I've answered. I've also talked about end of Phase II meeting with FDA. A question also, can you run through your regulatory plan for Phelan-McDermid?

So again, just to repeat, our plan here is that -- the next stage is a registration study. I mean that's certainly what we're going to put to the FDA. And the best thinking is it's likely to involve a placebo-controlled trial and an open-label trial looking at longer-term use as you'd expect.

Capital management. I've talked about that.

Is it possible in the future to do some kind of basket trial for neurodevelopmental disorders rather than separate trials for each syndrome?

So I think on our current indications, we don't think that's likely. All of these indications are they're different orphan indications. So even if you do a basket trial, FDA is going to want you to show efficacy in each of these disorders. So it doesn't -- and the end points you need to use are slightly different. So it doesn't mean you can pull them all and just do 1 trial with less numbers. You're going to end up with similar numbers. So there still could be some practical advantages, but we don't think it's likely with the current indications.

Capital management. Again I've talked about that.

Is Acadia working on a new formulation that isn't liquid that causes all the diarrhea?

Can't give you any specifics on that other than to say, I mean, Acadia has got every incentive to do whatever they can to address that issue. And I'm sure they're looking at every possible aspect.

Please, could you talk about any read-through from Phelan-McDermid success to potential success in Pitt Hopkins and Angelman? What would you consider a successful result in each of Pitt Hopkins and Angelman?

Okay. So I'm not far from the end of management so I'm not going to talk about any specifics about those trials. But I will just -- I'll go back in time to repeat what I said before the Phelan-McDermid trial, which was that, the best comparator we've got is the Rett syndrome program. And I said at the time, that it's about the totality of the evidence. But simplistically, if we got a result that was at least as good as the Rett Phase III result, which was approvable, then that would be a win. That's what I said. So I still feel that, about all the trials. The Phelan-McDermid trial was way in excess of that. I said before, it was for me, it was a way result. It could have been much worse -- much worse is the wrong word. Still good, but much less good than that and still been a success. And that's how I feel about the other two. So I'm certainly not seeing having the equivalent of the Phelan-McDermid result as the bar for success in the other two, it's not right at all. The bar I still feel is the Rett syndrome Phase III result.

Okay. Is autism or any other neurodevelopmental disorders in the radar for 2591?

So I've already said that certainly other new development disorders are I've said before about autism, the issue is it's -- well, it's a tough indication because it's so variable, but also it's not an orphan indication. And it's not straightforward to mix orphan and non-orphan indications and work at heady price with the same drug. So it's not a near-term target for us. We do have a patent in autism. So again, as I've said, I wouldn't rule it out, but it's not a near-term target for us.

There's another question, which is a little bit about the PR front, has any thought being given to retaining marketing PR services to help spread the good news about Neuren and raise awareness?

We do retain PR services, as I've said, I don't think that's anything to do with the share price movements. And as I said, we are putting in a huge amount of effort into the investment community and really have done over the last 2 years, which is, I think, why what's happened over the last 2 years has happened has been partly due to that.

I must say, assisted by the -- all the analysts that do great work on our stock. When do you anticipate Phase III to be completed in PMS?

You're way too early to say that all I'd say, again, if you want a comparator, you need to look at the Rett syndrome Phase III. We're hopeful we won't need a trial as big as that given the result, but that's the best comparator you have out there. Probably from start to results just under 2 years. So it's the best comparator you've got at the moment. But once we have the design agreed, then obviously, we will update that picture and be more specific about it.

Is there any chance that the FDA would allow 2591 to be given sold to those afflicted as described in the Phase II without full-blown and very expensive Phase III trials?

I don't think that's likely. I mean, of course, you can always do compassionate use programs, either you have the drug supply and you have FDA support to do that. We don't have the drug supply. We are, as I said, making drug this year for Phase III, so we can't do that at the moment. So the people in the Phase II trials can't continue with treatment, unfortunately, but we will certainly be doing that as part of the Phase III trial that they can then carry on the treatment afterwards. But I certainly don't -- we're expecting FDA is going to require a typical Phase III trial.

How confident are you on the next readouts given the strong results from PMS?

Can't get back to what I'd say. I mean, we have great confidence that the drug works here and it should work in those. They're all different endpoints, different sites, different types of patients, different age ranges in some. So there's lots of differences. So there's not an exact read through. We're confident the drug works and we'll wait to see the results.

Does Neuren liaise with people from groups like Foundation of Angelman Syndrome Therapeutics and putting trials together?

Gosh, I mean, absolutely, in every single syndrome we worked in, this includes Rett. None of it happens without people like that. They're all -- there's a 3-way partnership here between the key physicians, the advocacy groups such as that one and Neuren and then subsequently Acadia. None of this happens without that 3-way partnerships. They're incredibly important.

Do you have any thoughts on using 2591 for TBI?

Yes, people keep asking me that, but it's not on our radar in the short term. And it's not because it wouldn't be a worthy thing, I mean we love to be a hope patient population, but it's incredibly hard. So our experience with trofinetide was not just about whether the dose was right, whether the drug was right. It was about how hard it is to conduct trials in those populations. There's never been a success for a reason. So no, that's not in our plans for the near term. Again, there's plenty of data on 2591 in that setting, but that's not something we're planning to do in the near term.

Are you able to provide some guidance on your future tax expense? Are you able to use your deferred tax asset balance to offset the tax you pay in the next few years?

So look, the deferred tax asset balances there, but it's being used. So we're not going to -- we don't have tax losses beyond the year that's just been reported other than we have a load of tax losses in New Zealand. So if they are accessible, then that may be a different matter, but we don't have Australian tax losses left. So in the future, we will pay tax at the normal rate aside from the potential use of those losses.

Is my understanding correct there won't be any major announcements about ongoing trials for 6 to 12 months now?

I mean, no, that's not right. Quarter 2, Pitt Hopkins result and Quarter 3, and obviously, we'll narrow both of those down. The Angelman result, you've got another quarter from Acadia and your -- and there'll be the outcome from the FDA meeting. So I think there are plenty of catalysts coming into this year.

Are you in conducting active scientific inquiries into other indications for 2591?

Yes, I've already said we are. I have answered that about the Milestone payments. Yes. Again, a question about given the cash we're gonna have at the end of 2024. And I suppose what that's getting at is that we won't have big expenditure on Phase III in 2024, there will be some, but it will mainly be on that, and we're going to get a lot of cash. So we will -- the cash should be higher at the end of 2024.

So why wait until the share price is higher to start a buyback?

So again, your point is noted, and we are actively considering that whole time and we will continue to do so.

I understand it's up to Acadia to decide what to do with the priority review voucher, but what's your view on that? There's been a lot of sales around $100 million, but it's still not sold.

So look, Acadia said yesterday, I can't remember $400-something million, and it's going to be $500 million next year. So whilst $100 million is a lot of money and their 2/3 would be $66 million. They don't need it today. So I'm confident that what they're doing is biding their time until they can get the maximum for it. And there's supply and demand in that market, and you want to strike when you can get the best value for it. So I consider it. It's not -- and from accounting terms, isn't the receivable, but it is effectively receivable to us, whether they sell it or use it. And whenever they do it, it's really just the timing that's uncertain.

Another question about autism. I think I've answered that.

And so just as a target for 2591, would there be an application for Chromosome 18q Syndrome given some similarities?

So good question. Again, all I will say is we chose the 4 that we thought were the best initial targets, but there is certainly a list of others that could be worthy targets.

Okay. I think this might be the last one. What is the risk of long-term side effects?

So look, Acadia continues to track the safety profile of the drug. There's a lot of data now from its use over 2 years. They're collecting real-world data. So on the safety profile, of course, is a very prominent GI profile. But aside from that, there were no signals really in the Phase III stuff and as I'm aware the position continues to be that. So I don't think there's a high risk, but of course, it's incredibly important to continuously monitor that as Acadia are doing.

I think that's it. Gerry, can you just tell me if there's any more I've missed? I don't think there is. Okay. No more. All right. Look, again, gosh, it's been an hour. I didn't intend it to be an hour, but I think that reflects the number of people who've dialed in, which I really appreciate your time in the huge number of questions.

So just to reiterate, fantastic year. We have had, but incredibly excited about the year ahead. And whilst it's going to be extremely grueling, I'm looking forward to the next 2 weeks when we have a huge number of conversations with people in the investment community. And yes, we'll be very pleased to be doing that.

So thanks very much. Enjoy your evenings, and I'll see you soon.