Drugs, and Some Stuff Around Investing.


Well good morning once again. Yesterday I bought a new stock, Neuren Pharmaceuticals Limited (Unfortunately, we could not get stock quote ASX:NEU this time.). A pharmaceutical speculative which is looking to develop therapies to help patients with brain injury, neurodevelopment and neurodegenerative disorders. They currently have 5 drugs in the pipeline and boast successful clinical trials. Better still this is another company which stands to benefit from the TPP.

While controversial among some quarters (basically anyone not part of big pharma) the TPP is expected to protect the intellectual property of pharmaceutical companies for longer in more countries. It is understood that the American system could be forced upon Australia and other Asian countries to protect the companies and encourage development of new medicines and treatment. While this will block companies producing generic cheaper products for longer, the companies that invest in expensive clinical trials will be rewarded with protected margins. So it might be time to join big pharma!

These guys are based here in Australia but are doing a lot of work in the lucrative USA market. The reason for me being drawn in is the two most recent price sensitive announcements. Monday saw the company announce a new patent (in the form of a notice of Allowance) in the USA for treatments for Rett Syndrome and other neurological disorders. The patient (once formally given) will last until 2032.

Also included in this same announcement was that the FDA (US Food and Drug Administration) has designated this treatment for fast tracking, and has secured orphan drug designation in the USA and EU, providing guaranteed market exclusivity upon market authorisation. Basically, if the trials continue to be successful these guys own the market for up to 10 years. Work is currently underway to secure the same protection in other markets.

The above announcement saw ASX:NEU jump 3.6% in a day, or 7% in the past two days.

But the news got much better Tuesday. After successfully completing phase two trials the International Rett Syndrome Foundation has stumped up more coin to fund these trails. This time US $1m (which let’s face it is nearly a billion AUD). What this will lead to is the next phase of trial where the focus is on children and will see higher doses administered. Assuming success here the company will be on the verge of developing a drug exclusively to make bulk coin in the market.

And this announcement saw ASX:NEU jump another 3.45% today.

It can be tough to assess the value of pharmaceuticals on the market, and that is why they can so often be a bargain here in Australia. While many Australian investors have a low appetite for risk here at the Boiler Room, when the market says risk we reply quickly and sternly with “sign me up chief”.

The current market capitalisation is $146.9M (Aussie dollars this time). But a company with this kind of product could be worth billions. Some pundits are suggesting a price of $2.30+ per share assuming all goes well with the 5 trial phase therapies. So as mentioned off the top, this is a stock I have bought and I am chasing the speculative gains that patented drugs can bring.