This ASX 200 stock can rocket to a record high: Broker

This high-flying stock is far from having its wings clipped.

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The Neuren Pharmaceuticals Ltd (ASX: NEU) share price was in fine form on Monday.

The ASX 200 pharma stock ended the day almost 16% higher at $23.97.

This means that Neuren Pharmaceuticals' shares are now up 78% since this time last year.

It also means that they are now trading within sight of their record high of $25.95.

But if you thought the gains were over, think again. That's because the team at Bell Potter believes that this ASX 200 stock can rocket to a new record high.

What is the broker saying about this ASX 200 stock?

Bell Potter was pleased with the top-line results from Neuren Pharmaceuticals' phase 2 clinical trial of NNZ-2591 in children with Pitt Hopkins syndrome (PTHS). Those results revealed that NNZ-2591  delivered a "statistically significant improvement" across all four efficacy measures.

The ASX 200 stock's CEO, Jon Pilcher, commented: "We are very excited about the results of this first clinical trial in Pitt Hopkins patients. This underserved community has such urgent unmet need and we can now continue towards our goal of developing a first approved treatment."

Commenting on the results, Bell Potter said:

Another favourable mean CGI-I score of 2.6, albeit from a small sample size of 11 subjects. Anything under 3.5 would've been positive (lower=better), hence clearly a good result in our view. We are again impressed to see nearly half (=5/11) of subjects achieving a CGI-I score of 1 or 2, meaning the clinical investigator deemed their symptoms were "very much" or "much" improved from baseline. These larger responses after 13 weeks' treatment are less likely to be due to a placebo effect in our view. As a comparison, in the trofinetide Phase 3 trial, only 5% on placebo and 13% on trofinetide achieved a CGI-I score of 1 or 2, versus 45% in today's data.

Big returns ahead

In response to the trial results, the broker has retained its buy rating with an improved price target of $28.00.

Based on the current Neuren Pharmaceuticals share price of $23.97, this implies a potential upside of 17% for investors over the next 12 months. It would also mean a new record high for its shares.

The broker concludes:

Following today's further clinical validation of NNZ-2591 we increase our PT by 6% to $28.00 and maintain our BUY recommendation. Roughly half of our PT is comprised of value ascribed to NNZ-2591, which has now shown encouraging clinical data in two indications, each of which represent a similar if not larger market opportunity than Rett syndrome. For both completed Phase 2 indications, no approved treatments are available and NNZ-2591 is comfortably in poll position to be the first drug to market. A third Phase 2 readout with NNZ-2591 in Angelman syndrome is expected in Q3 CY24.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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