Fundie names underappreciated ASX biotech share with 'significant upside'

Why is this ASX biotech share a potential winner?

| More on:
female nurse in scrubs

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  •  Karst Peak Capital has recommended an ASX biotech share with "significant upside" 
  • The share has surged 188% in the past year, and 78% in the past six months.
  • FDA approval for this company's lead drug candidate could be on the way 

The S&P/ASX 200 Pharmaceuticals & Biotechnology index (AXPBKD) is down 2.7% in the past year, but this one ASX biotech share could be a winner.

The share has gained 188% in the past year, and 78% in the past six months.

So which ASX biotech share has one expert recommended?

Which ASX biotech share?

ASX biotech share Neuren Pharmaceuticals Ltd (ASX: NEU) could have "significant upside" from its current levels, one analyst believes. In today's trade, the shares are swapping hands at $3.81, a 2.06% fall.

Karst Peak Capital healthcare research head Hashan De Silva said Neuren could be worth $2.5 billion, more than five times its current market capitalisation. Writing for Livewire, he said:

Even though Neuren's share price doubled in Dec 21 following positive Phase 3 data, we believe there is still significant upside from current levels; in fact, in our view the risk/reward of the stock is more attractive today than at any point in the past few years and we added to our position following the Phase 3 readout.

The Neuren share price has surged around 129% since market close on 6 December. On 7 December, the company revealed promising results from a phase three trial into the use of its drug candidate Trofinetide in Rett Syndrome. Project partner Acadia Pharmaceuticals (NASDAQ: ACAD) plans to submit a new drug application to the US Food and Drug Administration (FDA) mid-year.

De Silva said he believes there is likely no competition for trofinetide for many years and he believes FDA approval is "very likely". He said:

Given the strong results in the Phase 2 and Phase 3 trials, the clean safety profile, strong patient advocacy and the lack of any approved drugs for Rett Syndrome, we believe it is highly likely the FDA will approve trofinetide.

We expect approval by late 2022/early 2023 given Acadia's plan to submit the drug for approval around mid-year.

On Friday, the company also informed the market it has received FDA approval for a phase two trial of the use of NNZ-2591 in Angelman Syndrome.

Neuren share price snap shot

The Neuren Pharmaceuticals share price has surged 27% in the past month although is down 1.5% in the past week.

In comparison, the benchmark S&P/ASX 200 Index (ASX: XJO) has climbed 2% in the past month and is down 3% in the last week.

Neuren has a market capitalisation of about $478 million based on its current share price.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Healthcare Shares

Cropped shot of an attractive young female scientist working on her computer in the laboratory.
Healthcare Shares

Why this top broker expects CSL shares to surge 26%

A leading broker foresees a big rebound ahead for CSL shares. But why?

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Healthcare Shares

Guess which ASX All Ords stock is jumping on big US news

This small cap is catching the eye on Thursday. But why?

Read more »

three excited doctors with hands in the air
Healthcare Shares

Two ASX healthcare shares that could be set to double

This broker has buy recommendations on these two shares. 

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Healthcare Shares

Telix shares jump 7% on big US news

Let's see what is getting investors excited on Wednesday.

Read more »

An older gentleman leans over his partner's shoulder as she looks at a tablet device while seated at a table.
Healthcare Shares

Macquarie tips 28% upside for this ASX healthcare stock

The broker expects big things from this New Zealand retirement village developer and operator.

Read more »

Teamwork, planning and meeting with doctors and laptop for medical, review and healthcare. Medicine, technology and internet with group of people for collaboration, diversity and support in hospital
Healthcare Shares

$10,000 invested in these ASX healthcare shares 5 years ago is now worth…

These healthcare stocks have brought big returns for investors 

Read more »

A man wearing a white coat and glasses is wide-mouthed in surprise.
Healthcare Shares

Guess which ASX 300 stock is crashing 55% today

What's going on with this stock? Let's see why investors are hitting the sell button.

Read more »

Woman serving customer in pharmacy.
Healthcare Shares

Up 132% in a year, are Sigma Healthcare shares still a good buy post the Chemist Warehouse merger?

After gaining 132% in 12 months, it too late to buy Sigma Healthcare shares today?

Read more »