Health Check: Neuren’s ‘Willy Wonka’ voucher shows how a piece of paper can be worth US$50m

Having pocketed a US$50 million share of an FDA priority review voucher, Neuren reports bumper results.
ACCC says ‘no probs’ to Sigma-Chemist Warehouse union
The Trump Ascendency Mark Two is a double-edged sword for the healthcare sector

There are a few ways to earn a fortune from sitting back and doing nothing, such as buying a house 10 years ago at the cusp of the nation’s prolonged property boom.

Or buying and holding Bitcoin well ahead of Donald Trump’s Damascus moment on cryptocurrencies …

But few ‘money for nothing’ efforts are as spectacular as Neuren’s windfall from trading a piece of paper.

The valuable parchment in question is a fungible US Food & Drug Administration (FDA) priority review voucher (PRV), commonly referred to as a ‘Willy Wonka’ ticket.

The PRVs are attached to approval of a drug for a rare paediatric disease, in this case Neuren Pharmaceuticals (ASX:NEU) Daybue (trofinetide) for the childhood neurological disorder Rett Syndrome.

Neuren’s US marketing partner Acadia was awarded the PRV, but it’s chocolates all around with Neuren entitled to one-third of the value.

The idea of the PRVs is that the recipient doesn’t avail of the PRV itself. After all, the recipients have already got a blockbuster to market.

The vouchers usually are sold to another drug maker with another promising remedy in the offing.

PRVs offer a fast track around the regulatory Oompah-Loompas who can delay a drug launch, with even a setback of a few months likely to cost billions in foregone revenue.

The unnamed big pharma buyer evidently has decided that a US$150 million outlay is well worth the risk of their drug not being approved (and there’s no guarantee).

As of April this year, the FDA had issued 53 PRVs, with the scheme initiated in 2007.

Industry sources – okay, Dr Google – suggest that 29 had been sold (as of May 2024) for prices ranging from US$67 million to US$350 million.

In May, the Nasdaq listed Day One Biopharmaceuticals sold a PRV for US$108 million, which suggests US$150 million is a decent price for a contemporary transaction.

Put in context, Neuren this morning announced Acadia had chalked up Daybue revenue of US$251.7 million for the nine months to September 2024. Calendar 2024 Daybue revenue is expected to be US$340-350 million, with income (revenue) flowing to Neuren of US$216-218 million.

Neuren and Acadia note the PRV transaction was subject to “customary conditions”. But if they’re good little boys and girls and don’t do an Augustus Gloop or Veruca Salt, the money’s in the bag.

Neuren shares this morning gained 66 cents to $13.93, taking the two-day gains (since the PRV announcement) to 13%.

‘Nothing to see here’ as competition watchdog waves through chemist union

After almost a year of waiting, Sigma Healthcare (ASX:SIG) shareholders had little to fear about the competition regulator kyboshing its transformative merger with the unlisted Chemist Warehouse.

As well as decreeing the union was unlikely to substantially lessen competition nationally or locally, the Australian Competition and Consumer Commission (ACCC) today was quite glowing about the consumer benefits.

“Consumers value different aspects of Sigma’s and Chemist Warehouse’s banner pharmacies’ offerings,” chirps ACCC Chair Gina Cass-Gottlieb. “Importantly, consumers will continue to have choice between smaller format stores offering personalised services and the Chemist Warehouse offering focused on larger format discount stores and front-of-store offerings.”

The union will combine Sigma’s 400-plus Amcal and Discount Drug Store pharmacies and wholesale distribution business (servicing more than 4000 chemists) with Chemist Warehouse’s 600 franchised outlets.

A key point is that Sigma’s chains are ‘banner’ pharmacies rather than Sigma-owned per se, which means they buy wholesale from Sigma but can make their own commercial decisions (including product sourcing).

“Evidence shows that retail pharmacies do not face significant barriers to switching and pharmacy customers do switch wholesalers, although concerns remained for pharmacy customers in longer term wholesale and/or franchise agreements with Sigma,” Cass-Gottlieb says.

For chemists with a long-term Sigma supply contract, the regulator accepted Sigma’s undertaking that it would not make it hard for the apothecaries to shop elsewhere.

Suppliers more than happy to step in include Australian Pharmaceutical industries, owned by Woolworths (ASX:WOW) and the listed trans-Tasman EBOS Group (ASX:EBO), Chemist Warehouse’s erstwhile supplier.

Sigma shares vaulted 31% to $2.55 and EBOS shares were steady at $33.60.

Trumpcare has implications for ASX listed US-centric biotechs – but what?

In the US, analysts are mulling the likely repercussions of Donald Trump’s win for the health and biotech sector and the diagnosis is … mixed.

To summarise a report in the online Biospace, likely positives include a more amenable stance on merger and acquisition activity. Historically, the sector does well under Republican administrations.

A key negative is Robert F. Kennedy, Jr’s aspiration for a key role in healthcare administration, as payback for the former independent candidate’s support of Trump.

RFK jr’s anti-vaccine rhetoric has raised eyebrows, to put it mildly.

For the legion of ASX biotechs operating over there, a more clear and present danger is the disruption of drug and device pricing arrangements.

Some of them are linked to Joe Biden’s omnibus Inflation Reduction Act (IRA), which Trump is expected to “deprioritise”.

This could change the way the Centers for Medicare and Medicaid Services (CMS) thinks about pricing in areas such as generics and orphan drugs.

More broadly, Trump could pursue a populist agenda to slash drug prices.

It’s too early days to be definitive. After all, Trump doesn’t get the keys to the White House until January 20, unless he uses the one under the flower pot he left last time.

Trivarx widens its depression-detecting remit

TrivarX (ASX:TRI) shares soared 40% this morning after the developer of an AI-driven depression detection algo said it was working on an updated tool with applicability beyond sleep centres.

And – no – we’re not talking about the Democrats’ deflated campaign HQ.

The company’s philosophy is that sleep is the window into mental health. Its current algo MEB-001 diagnoses major depressive episode (cMDE) via sleep analysis, but requires multiple sensors.

MEB—001 version 2.0 only needs a single-channel electrocardiogram, providing adequate heart rate data to analyse the condition.

The company says the new algo delivers 87% sensitivity (the ability to detect the disease) and 67% specificity (the ability to rule out the disease).

This was based on testing data from 295 subjects in a phase II study of the old algo, which saw sensitivity and specificity scores of 87% and 72% respectively.

Trivarx says the new app will enable it to unlock “large new addressable market opportunities” outside of sleep centres, including cardiology monitoring, sports and performance bodies, treatment monitoring and consumer wearables.

Trivarx shares popped 0.6 cents, or 40% to 2.1 cents.

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