PERTH, Australia – Melbourne-based Neuren Pharmaceuticals Ltd. will be able to progress NNZ-2591 to the clinic for three orphan indications after raising AU$20 million (US$13.75 million) in a placement to institutional and sophisticated investors in Australia, New Zealand, Hong Kong and the U.K.
The funds raised will take NNZ-2591 to proof of concept in Phelan-McDermid, Angelman and Pitt Hopkins syndromes, each of which has received orphan drug designation in the U.S., Neuren CEO Jon Pilcher told BioWorld.
Neuren is developing therapies for neurodevelopmental disorders with high unmet need, using synthetic analogues of neurotrophic peptides that occur naturally in the brain. All three of those orphan diseases are debilitating disorders that currently have no approved treatments, he said.
The company started a phase I trial in Perth to assess safety, tolerability and pharmacokinetics in healthy adults. Pilcher said he expects to start phase II trials in all three indications in early 2021.
The mechanism of action for NNZ-2591 is similar to trofinetide, the company’s lead compound, and is also involved in regulating the IGF pathway in the brain.
Trofinetide is a synthetic analogue of the amino terminal tripeptide of IGF-1 designed to reduce neuro-inflammation and support synaptic function. In the central nervous system, IGF-1 is produced by both neurons and glia and is critical for normal development and responding to injury and disease.
In the brain, IGF-1 gets broken down into two separate molecules, one of which is glypromate, or GPE, which affects glial cells, while IGF-1 affects mostly neurons. Trofinetide is Neuren's chemically modified form of GPE.
Neuren granted an exclusive license to Acadia Pharmaceuticals Inc. for the development and commercialization of trofinetide in North America, while retaining all rights outside North America. Worth up to $465 million, the deal makes Neuren eligible to receive one-third of the market value of any rare pediatric disease priority review voucher granted from the FDA.
The FDA granted Acadia and Neuren a rare pediatric disease designation for trofinetide for treatment of Rett syndrome.
Trofinetide is currently in a phase III trial for Rett syndrome, a debilitating neurological disorder that occurs primarily in females between 6 to 18 months of age. It is caused by mutations on the X chromosome on a gene called MeCP24 and is most often misdiagnosed as autism, cerebral palsy or nonspecific developmental delay. It causes problems in brain function that are responsible for cognitive, sensory, emotional, motor and autonomic function.
Trofinetide has also completed a phase II trial in fragile X syndrome, which is the most common inherited cause of intellectual disability and the most common known cause of autism. It is caused by a single gene defect on the X chromosome that impacts the FMRP protein, which is responsible for regulating the synapses of nerve cells.
Currently, there are no treatments approved for Rett syndrome or fragile X syndrome. Both trofinetide programs have received fast track designation by the FDA and orphan drug designation in both the U.S. and the European Union.
Neuren will be able to use all of the data that Acadia generates, the CEO said.
Stock in recovery mode
Due to the COVID-19 pandemic, Acadia had to pause enrollment in the phase III trial in March, and Acadia’s stock took a nosedive. Pilcher said those trials have now resumed, and results are expected in 2021.
On the heels of that news, Neuren announced that Hong-Kong based Karst Peak Capital Ltd. acquired 14% of Neuren’s shares, making it the company’s largest shareholder.
“It was clear we needed to raise funds, so hopefully today’s raise has cleared up some uncertainty,” the CEO said.
Before the capital raise, only 5% of the register was composed of institutional investors, but with the raise it now comprises one-third, Pilcher said, making the last few months a “transformation for the company.”
“We have significantly enhanced the composition of our share register, with new domestic and international institutions. We are pleased to welcome new shareholders and grateful for the strong support that they and existing holders have shown for our goal of achieving the large value drivers for both trofinetide and NNZ-2591 over the next two years,” Pilcher said.
The placement consisted of 14.3 million shares priced at AU$1.40 per share, which represented a 10% discount to the 10-day volume weighted average price of $1.56 and 15% to the last closing price of AU$1.64 per share. MST Financial acted as lead manager and bookrunner for the placement.
An additional 2.142 million shares are on offer through a share purchase plan to existing shareholders in Australia and New Zealand to raise up to AU$3 million at the same offer price of AU$1.40 per share. The share purchase plan offer will close on July 31.
While Acadia has been advancing trofinetide, Neuren continued to make progress with the development of NNZ-2591, for which it retains all global rights.
“When we did the deal with Acadia, they said the expectation for Rett Syndrome alone was $500 million,” Pilcher said. “We think [NNZ-2599] is a bigger opportunity than Rett syndrome, so it could become more valuable than trofinetide.”
Angelman syndrome has attracted a bit of attention lately, he said, as Roche Holding AG is working on a gene therapy product, and Ovid Therapeutics Inc. has a phase III candidate in development as well.
“Our drugs are disease modifying without fixing the mutation, so we’re trying to fix the underlying problem.”
Neuren's shares on the Australian Securities Exchange (ASX:NEU) were down 13% on the news, trading at AU$1.42 at market close on June 29, compared to the previous close of AU$1.64.