Shares in Neuren Pharmaceuticals Ltd (ASX: NEU) have been under pressure in the past few months, so it's a good time to take a step back and see what the experts think about the way forward.
The analyst team at Macquarie have an outperform rating on the stock and a bullish share price target, which we'll get to shortly.
Firstly, let's look at the news that has been coming out of the company recently.
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Solid profit result
Neuren in late February reported its full-year financial results, showing it had generated $65 million in royalty income and a profit after tax of $30 million.
The royalty income came from the company's Daybue drug, with the royalty figure up 15% from 2024.
Neuren said it had now earned $510 million from Daybue since it was launched in 2023, and the company had $296 million in cash and short-term investments on hand at the end of December.
The company had also completed a $50 million share buyback and was starting another one, kicking off on March 2.
Neuren Chief Executive Officer John Pilcher said it was a formative year for the company.
He added:
In 2025 we achieved a critical milestone for Neuren's value creation strategy with the commencement of our Koala Phase 3 clinical trial of NNZ-2591 in Phelan McDermid syndrome. There is so much to look forward to this year as we continue to execute that program towards a New Drug Application and in parallel advance NNZ-2591 for Pitt Hopkins syndrome and HIE. All of this is self-funded by our growing revenue from Daybue, which has now reached $510 million since launch in 2023. We are very excited to watch the impact of the recent launch of Daybue Stix in the US as a potentially attractive new option for Rett syndrome patients and their families.
The company also said this week that its partner Acadia Pharmaceuticals would request a re-examination of Daybue for marketing approval in Europe, after being knocked back previously.
The drug is approved in the United States, Canada, and Israel, where it represents the first and only treatment approved for Rett syndrome, Neuren said.
Neuren shares looking cheap
The Macquarie team, in a research note sent to clients, said the Daybue royalties were in line with expectations, while noting that the company said a record number of patients were receiving Daybue shipments in the last quarter of the year.
Macquarie has reduced its price target on Neuren shares by $1.10 to $19.10, driven by changes to assumptions around Daybue earnings and the European regulatory process.
This price target, if achieved, would represent a 52.1% return.
