Neuren Pharmaceuticals (ASX:NEU): Assessing Valuation After FDA Fast Track Win for Rare Disease Therapy

Neuren Pharmaceuticals (ASX:NEU) caught attention after announcing its candidate NNZ-2591 received Fast Track designation from the US FDA for both Phelan-McDermid and Angelman syndromes. This status could help accelerate development and review timelines.

See our latest analysis for Neuren Pharmaceuticals.

Neuren’s Fast Track milestones have fueled fresh momentum, with the share price climbing 79% year-to-date and a remarkable 5-year total shareholder return nearing 2,000%. These advances come as the company also secured new orphan drug indications and pressed ahead with late-stage clinical trials, which has increased optimism about its long-term growth story.

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With momentum building from regulatory wins and a soaring share price, the question now is whether Neuren Pharmaceuticals remains undervalued or if the market has already priced in its promising future growth potential.

Most Popular Narrative: 10.3% Undervalued

Neuren Pharmaceuticals’ most followed narrative values shares at A$24.51, about 10% above the last close of A$21.98. This reflects an expectation for powerful long-term catalysts and significant margin growth. The narrative outlines a potential path to higher earnings, while also acknowledging critical business dependencies and ambitious expansion plans.

The expectation of an increased diagnosed population and greater patient uptake of DAYBUE in the U.S. suggests potential revenue growth as more patients gain access to the drug. Acadia’s investment in expanding its field force and launching direct-to-consumer campaigns is expected to increase DAYBUE’s reach, further boosting Neuren’s revenue through royalties.

Read the complete narrative.

Want to see how margin expansion and sales dynamics shape this bullish outlook? The key assumptions center on patient growth and international royalty streams. What significant bets did analysts make to support their price target? Only the full narrative reveals the scenarios that underpin the current undervaluation call.

Result: Fair Value of $24.51 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, it is still important to note that unexpected regulatory delays or changes with key partners could quickly change Neuren’s growth outlook.

Find out about the key risks to this Neuren Pharmaceuticals narrative.

Another View: Multiples Paint a Mixed Picture

Looking at valuation through the lens of the current price-to-earnings ratio, Neuren Pharmaceuticals trades at 18.7x, which is below both the Australian market average (21.5x) and the global pharmaceuticals average (24.6x). However, compared to similar peers, its ratio is higher than the peer average of 16.1x. The fair ratio is considered to be 21x, suggesting there may be room for re-rating. This also indicates that valuation risk remains if expectations change or if market sentiment turns.

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Neuren Pharmaceuticals for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Build Your Own Neuren Pharmaceuticals Narrative

If you have your own take or want to dig deeper into the numbers, you can build a custom Neuren Pharmaceuticals narrative in just a few minutes. Do it your way.

A great starting point for your Neuren Pharmaceuticals research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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