When Benjamin Franklin penned a letter to J-B Leroy, noting that nothing can be said to be certain, except death and taxes, he memorialised words that apply to natural persons and juridic persons equally. Just like people, all companies are supposed to – and do – eventually die. Some are meant to die quickly (like Cynata), others have a long and fruitful life before sort of dissipating into the ether. Some firms change so dramatically over an extended period of time that they are hardly recognisable as the original corporate “persona.” Eventually, if a company becomes too big and bloated, it gets torn apart like a rotting carcass in shark-infested waters, returning nourishment back to the sea of intellectual capital.
A few companies, as much as we might wish it, just don’t seem to die. Neuren (ASX: NEU) is one of them.
One of the things I despise about ASX life sciences is the number of zombie companies that keep re-wrapping the same old turd, and seem to defy the corporate Darwinism that should be part-and-parcel of failure. I got plenty of scathing emails about my last slightly dove-ish post about Circadian, yet at least it is a company that may have one more shot at delivering on the promise, even if its market cap has been significantly decimated (lots of emotional shareholders out there … wow!). Neuren simply does not have this potential. There is no robust clinical evidence to date that a Glypromate analogue (a.k.a. NNZ-2566) is going to be useful or efficacious as a therapeutic. The indications that Neuren is now pursuing following a disastrous Phase III study are the sort of ultra-orphan indications that get investors all aroused and make for great bedtime reading, but it’s hard to really see the clinical case for Neuren’s “pipeline” (to use the term generously) – or the financial focus in running so many concurrent indications.
Indeed most of Neuren’s proposed indications are so tough to clinically validate that most proper pharma companies wont touch them with someone else’s barge pole. Certainly the majority of current drug studies for NNZ-2566’s proposed neurological indications are about symptom management, not “cure.”
I mean Fragile-X, seriously?
This condition has such a broad continuum of symptoms and disability that it, quite frankly, mystifies me how you would even recruit and run an effective clinical trial. Plus current fetal screening tests are 99% accurate so this isn’t going to be a rapidly growing patient pool.
Traumatic brain injury?
Over what period of time do you have to see improvement and how do you control for it in a drug setting, vs the “standard of care”? Don’t even get me started on concussion. How long and arduous are the outcome studies going to have to be to show that a neuroprotectant used in the concussion setting confers a lifetime benefit over rest and not thinking too hard for a few weeks? How do you control for it? Who the hell is going to pay for it?
One gets the impression that Neuren has not learned any real lessons from a failed Phase III. I think it’s pretty much generally agreed that Neuren’s Phase III trial design was poorly implemented and even questionable whether treatment of cognitive impairment in patients undergoing cardiac surgery with bypass was an intelligent strategy to understand the purported neuroprotective characteristics of GPE. The current strategy doesn’t seem a whole lot smarter.
Now it seems we have the same old Neuren behavior re-surfacing. By this I mean ploughing ahead with clinical development, without a data-driven basis for doing so. In the last set of announcements I saw in relation to the Phase II Rett’s study from November last year, I frankly scratched my head. How can you call this a success in any way except confirming that in a short-term dose regimen the toxicity / AE profile is not problematic? Very small number of difficult late-stage patients that undergo a huge amount of temporal variability, and a very short duration of clinical evaluation. Even Neuren’s clinical collaborators wouldn’t hang their hat on the data in the public domain – not really a proper Phase II study, more like a Phase I expansion cohort for dose escalation. Apparently the FDA felt similarly because had the data really shown statistically defensible improvement, I am sure they would have been successful in obtaining Breakthrough status.
Moreover, Neuren is the typical over-hyping company that uses the drama of trading halts and (in my opinion) excessive use of forward-looking announcements (like the announcement of submission of an FDA application package for Breakthrough designation just before the JP Morgan conference). I hate that crap. Neuren also has, in my opinion, a fairly murky divide between board and executive team and it needs to properly address this if it is to give shareholders confidence in decision making and objective evaluation of program development progress (i.e. one independent NED – that’s it).
In short, Treagus needs to show that he hasn’t simply transplanted the (purported) autocratic and toxic board dynamic of Acrux into a new entity. He’s deservedly earned his reputation for being a sharp guy, now he needs to show that he can give Neuren a last-ditch chance by cutting back the “pipeline”, showing some plausible clinical strategy and demonstrating a commitment to corporate governance.