Neuren Pharmaceuticals (ASX: NEU) has received the first US$10 million payment under a recently announced licence deal with US-based ACADIA Pharmaceuticals to develop its drug trofinetide to treat patients with Rett syndrome.
The Melbourne-based biopharmaceutical company announced its agreement with ACADIA earlier this month, granting the latter the exclusive rights to develop and commercialise the drug for Rett syndrome and any other clinical indications in North America.
Neuren retains all commercial rights to trofinetide outside of the continent.
According to Neuren, ACADIA’s investment for Rett syndrome alone, prior to a US marketing application, is expected to be around US$55 million.
The company today said it was in the process of completing manufacturing activities as well as the remainder of the second non-clinical chronic toxicology study.
Under the new deal, ACADIA has taken over the funding and execution of all remaining development activities including a single phase three trial of trofinetide for Rett syndrome, due to commence in the second half of 2019.
Rett syndrome and sales potential
Rett syndrome is a genetic neurological disorder that typically starts between six to 18 months of age and is found primarily in females.
The condition is often misdiagnosed as autism, cerebral palsy or non-specific developmental delay. It causes loss of language and motor function and in atypical cases, can lead to growth retardation and scoliosis.
There are currently no approved medicines for the treatment of Rett syndrome and treatment options are limited to physical therapies, as well as speech and music therapy.
Rett syndrome has been estimated to occur in one in 10,000-15,000 live female births worldwide. Based on this, ACADIA has indicated a peak annual sales potential for trofinetide in North America of more than US$500 million.
Under the licence agreement, ACADIA will pay Neuren “double-digit” percentage royalties on net sales of the drug.
In addition, Neuren is eligible to receive up to US$105 million on the achievement of US development milestones for Rett syndrome and Fragile X syndrome.
Fragile X is another genetic condition causing intellectual disability but, in this case, males are generally affected with greater severity.
Neuren can also earn up to US$350 million upon achieving thresholds of total annual net sales of the drug, as well as one third of the value of any Rare Paediatric Disease Priority Review Voucher awarded by the US Food and Drug Administration on approval of a new drug application for trofinetide.
Having received this initial US$10 million payment, Neuren said it was now well placed to consider development and commercialisation alternatives for the drug in other parts of the world including Europe and Japan, as well as being able to advance the development of its second patented drug compound, NNZ-2591.
Neuren directors scoop up stock
Two Neuren directors have bought up shares in the company through on-market trades following the initial announcement of the ACADIA deal.
Patrick Davies snapped up $100,001 worth of shares last week, while Dr Jenny Harry purchased $20,584 shares earlier in the month.
Both were newly appointed as non-executive directors at the start of July.
Neuren shares were up 12.05% to $1.255 on the news by afternoon trade.