ASX healthcare stock Neuren Pharmaceuticals Ltd (ASX: NEU) has surged in early trade on Wednesday after a company update.
Shares in the biopharma company currently fetch $12.95 apiece, nearly 6% higher on the day after it announced it would receive a lump sum payment from its US partner, Acadia Pharmaceuticals.
This unexpected influx of cash has sent the ASX healthcare stock higher today as investors react to the positive impact on Neuren's balance sheet. Let's take a closer look.
ASX healthcare stock to get $75 million
Neuren advised it will receive a lump sum payment from partner Acadia after the ASX healthcare stock's partner finalised an agreement to sell a Rare Pediatric Disease Priority Review Voucher (PRV).
The US Federal Drug Administration (FDA) had awarded the PRV to Acadia following the approval of Neuren's DAYBUE label for treating Rett syndrome. Rett is a rare neurological disorder.
Under its agreement with Acadia, Neuren is entitled to one-third of the sale proceeds. Acadia made the PRV sale for a hefty US$150 million, thereby securing Neuren approximately US$50 million.
This equals roughly AUD $75 million at present exchange rates.
[Acadia] has entered into a definitive asset purchase agreement to sell the Rare Pediatric Disease Priority Review Voucher (PRV) for US$150m upon the closing of the transaction.
The transaction is subject to customary closing conditions, including expiration of applicable waiting period under the Hart-Scott Rodino (HSR) Antitrust Improvements Act.
Beyond the PRV sale, Neuren also continues to gain revenue from the DAYBUE label. Management expects sales of US$132 to US$138 million in North America this year.
Last year, the ASX healthcare stock booked a total of $86 million on the same product, a 47% growth at the lower end of estimates.
Brokers are bullish
Elsewhere, the stock is favoured by the broker crowd, catching a buy rating from consensus, according to CommSec.
Bell Potter sees significant upside in Neuren Pharmaceuticals. It rates the stock a buy with a price target of $25 per share.
This represents a near doubling of the ASX healthcare stock's current market value.
Bell Potter's optimism is largely based on Neuren's product pipeline, especially its second major asset, NNZ-2591.
This candidate is currently in Phase 2 trials, meaning it is being assessed for safety and efficacy. The compound is targeting several rare and complex neurological conditions.
Bell Potter views NNZ-2591 as a future revenue driver that could unlock a "significant increase in revenue and earnings" potential for Neuren.
The broker believes Neuren is well-funded to continue this development as well. This is thanks to the steady revenue stream from its first commercialised product, DAYBUE. This, as well as milestone payments and royalties from its partnership with Acadia.
Foolish takeaway
This ASX healthcare stock has caught a bid today after its positive update. Zooming out, it has another drug candidate in the pipeline, which brokers are bullish on.
In the last 12 months, the stock is down nearly 4%.
