I’m looking forward to Christmas morning, and here are two more stocks that I would be delighted to find in my stocking. Both are from areas of the share market where news flow is very important – biotech and resources respectively – but these two stocks have both put a lot of runs on the board when it comes to concrete achievements, and the path ahead looks promising.
- Neuren Pharmaceuticals (NEU, $13.32)
Market capitalisation: $1.7 billion
12-month total return: –22.3%
3-year total return: 49.2% a year
FY25 (December) projected dividend yield: no dividend expected
FY25 (December) projected price/earnings (P/E) ratio: 55.5 times earnings
Analysts’ consensus price target: $27.74 (Stock Doctor/Refinitiv, six analysts), $25 (FN Arena, one analyst)
I nominated Neuren Pharmaceuticals (NEU) as one of my stocks of 2021, at $1.30, and saw it rise to $3.75.
I am going with it again in 2025, this time at $13.32.
The drug developer is developing new therapies for a group of highly debilitating neuro-developmental disorders that all emerge in early childhood and are characterised by impaired connections and signalling between brain cells.
Neuren’s flagship drug, Trofinetide, targets the rare neurological conditions known as Rett Syndrome and
Fragile X Syndrome (it is also being investigated as a treatment for traumatic brain injury.) Rett Syndrome is
a form of autism that affects about one in 10,000 females, and is characterised by intellectual disability, loss of
motor control and muscle rigidity. Fragile X is an inherited chromosome mutation known as a cause of autism,
which according to and research cited by the Royal Australian College of General Practitioners affects about one in 4,000 males and one in 6,000 females globally.
In March 2023, Trofinetide, under the brand-name ‘DAYBUE,’ became the first treatment approved by the US Food & Drug Administration (FDA) for Rett syndrome.
Back in 2018, Neuren signed a deal with US company Acadia Pharmaceuticals, under which Acadia took the North American rights to Trofinetide, in return for funding a 180-patient Phase 3 trial for Rett Syndrome, and commercialisation costs if and when it entered the market. Neuren has since granted Acadia the exclusive worldwide licence for the development and commercialisation of Trofinetide: Neuren received US$100 million up-front, plus the deal envisaged additional potential milestone payments of up to US$427 million, plus royalties.
After its FDA approval in March 2023, Acadia launched ‘DAYBUE’ in the US market the following month. As at the third quarter of 2024, DAYBUE’s net sales for nine months exceeded the full-year threshold of US$250 million, to trigger Neuren’s first sales milestone income payment from Acadia, of US$50 million. Last month, Acadia sold a Rare Paediatric Disease Priority Review Voucher (PRV) for DAYBUE for US$150 million ($229 million), a significant premium to the company’s US$33 million ($50.4 million) estimate of the value of the voucher as reported in its FY23 annual report. Neuren received one-third of the PRV payment.
(The PRV was granted by the US Food and Drug Administration (FDA) following the approval of DAYBUE (Trofinetide) for the treatment of Rett syndrome. The FDA established the PRV program to provide incentives for biotech companies developing new drugs for rare paediatric diseases. Through a PRV, the FDA cuts the review time of a drug application from the usual ten months to six months.) In October, Acadia announced it had gained Health Canada approval for DAYBUE to treat Rett syndrome in adult and paediatric patients aged from two years and older under the Priority Review process. DAYBUE is the first and only drug approved in Canada for the treatment of Rett syndrome and it is the first time the drug has been approved for use outside of the US.
Neuren is developing a second drug, NNZ-2591, for multiple serious neuro-developmental disorders with different genetic origins that emerge in early childhood and have no or limited approved treatment options. Recognising the urgent unmet need, all NNZ-2591programs have been granted “orphan drug” designation by the FDA in the United States: orphan drug designation provides incentives to encourage development of therapies for rare and serious diseases.
In May, Neuren announced positive top-line results from the Phase 2 clinical trial of NNZ-2591 in children with Pitt Hopkins syndrome (PTHS) a rare genetic disorder that causes developmental, intellectual and physical changes in children; in August, the company followed this by reporting positive top-line results from the Phase 2 clinical trial of NNZ-2591 in children with Angelman syndrome (AS), another rare genetic disorder causing delayed development, problems with speech and balance, mental disability, and, sometimes, seizures. The positive results of NNZ-2591 in PTHS and AS followed the announcement of positive top-line results from the Phase 2 clinical trial of NNZ-2591 in children with Phelan McDermid syndrome (PMS), a rare genetic condition in which the most common characteristics are intellectual disability, in December 2023. PMS is a particularly severe neuro-developmental disorder affecting children – it affects one in every 10,000 people. There are no medications, drugs, or therapies specifically for the syndrome, which has an overwhelming unmet medical need.
NNZ-2591 also has a US investigational new drug (IND) application open for Prader-Willi syndrome (PWS), a rare and complex neurodevelopmental disorder resulting from an abnormality on the 15th chromosome. PWS alters functioning of the hypothalamus in the brain causing a wide range of symptoms which include impacts on cognition, emotional regulation, growth, muscle development, metabolism and appetite.
In July, the close relationship that Neuren and Acadia have developed was strengthened with the granting to Acadia
of the exclusive worldwide licence for NNZ-2591, but solely in Rett and Fragile X – this enables coordinated global
development and removes existing restrictions on Neuren for NNZ-2591 in those two indications. The structuring of
the milestone payments and royalties to Neuren for NNZ-2591 in Rett and Fragile X syndrome will be identical to
those the companies agreed for Trofinetide. Neuren retains worldwide rights to NNZ-2591 in all other indications
(the other conditions it can treat).
The beauty of how Neuren is positioned is that the multiple neurological diseases at which NNZ-2591 is aimed are larger than the market for Rett syndrome treatment. In other words, NNZ-2591 could be an even bigger earner for Neuren. It has generated very strong trial data, and the company has every right to be confident in it. Neuren has been a great ASX biotech success story and analysts believe it’s only getting started.
- Boss Energy (BOE, $2.61)
Market capitalisation: $1 billion
12-month total return: –31.3%
3-year total return: 3.9% a year
FY25 (June) projected dividend yield: no dividend expected
FY25 (June) projected price/earnings (P/E) ratio: 26.4 times earnings
Analysts’ consensus price target: $4.40 (Stock Doctor/Refinitiv, eight analysts), $3.883 (FN Arena, six analysts)
Uranium might have had something of a false dawn in 2023–2024, but the medium to long-term demand-supply outlook still looks very favourable for the commodity, because supply is well below demand – a situation that has been in place since 1991. Uranium markets have been working through secondary supply, arising from the Cold War era of excessive uranium production. In 2024, uranium mining is projected to meet less than 90% of global reactor needs: global uranium mine supply in 2024 is forecast to reach 156 million pounds, well short of the 176 million pounds required by nuclear reactors. The problem is that the secondary supplies source is getting very low.
This is at a time when the World Nuclear Association sees increasing energy consumption (particularly from the AI thematic) and decarbonisation as pushing uranium demand as high as 300 million pounds by 2040 – a figure that would require mine supply to almost double. Something has to give in terms of the supply response.
Boss Energy is one of the companies front-and-centre in this scenario. It has re-started the Honeymoon uranium mine, in the north of South Australia, a mine that was Australia’s second operating in-situ recovery uranium mine, commencing production in 2011 under previous owner, Uranium One. Operations at Honeymoon were suspended in November 2013 in response to falling uranium prices: Boss Energy bought it in 2015, and production re-started in April 2024, making Honeymoon the third active uranium mine in Australia, joining BHP’s Olympic Dam and Heathgate Resources’ Four Mile mine, with all three in the north of South Australia.
At full production, Honeymoon will produce 2.5 million pounds of uranium oxide a year, at an average all-in sustaining cost (AISC) of US$32 a pound, comfortably in the black at the current price of US$77 a pound. (The AISC is a figure that incorporates not only the “cash cost” of production, but all the costs that allow production to be sustained; it indicates break-even.) Boss Energy has extended the resource by more than four times, from 16.57 million pounds to 71.67 million pounds. The current mine-life is projected at about 11 years, but there is a 100,000-million-pound total exploration target, mainly low-risk and low-cost regional resources nearby, that could extend this significantly.
During the September 2024 quarter, the Honeymoon operation put 89,516 pounds of uranium oxide into drums, up from 28,844 pounds in the June quarter. The first shipment of 57,000 pounds of uranium oxide went off to a utility customer. A third production column is expected to be commissioned by the end of the month, and the company says Honeymoon is on track to meet production guidance of 850,000 pounds of uranium oxide in FY25.
Boss Energy was wary of being a one-asset producer, so, in February, it bought a 30% stake in the Alta Mesa project in Texas from enCore Energy for $93 million; Alta Mesa re-started production in July, with the first shipment going off to utility customers in October. Alta Mesa is expected to reach full operational capacity of 1.5 million pounds of uranium oxide a year by 2026: at a 30% stake, Boss’
share of Alta Mesa production is 450,000 pounds of uranium oxide a year at nameplate capacity.
Analysts like the Boss Energy story a lot, with a significant earnings boost emerging in FY26.
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