Why are Neuren Pharmaceuticals shares crashing 9%?

The market may be storming higher but this biotech stock isn't. But why?

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Neuren Pharmaceuticals Ltd (ASX: NEU) shares have returned from their trading halt with an almighty thud.

In morning trade, the pharmaceuticals company's shares are down 9% to $15.51.

This compares unfavourably to the performance of the ASX 200 index, which is up 0.65% currently.

Why are Neuren Pharmaceuticals shares being hammered?

There are a couple of factors at play today.

One is a weaker than expected second quarter update, which was released to the market before its trading halt. That update was covered here earlier this week.

It seems that this update is overshadowing the release of promising trial results relating to its NNZ-2591 product candidate this morning.

What did it announce?

Neuren Pharmaceuticals has released top-line results from its Phase 2 clinical trial of NNZ-2591 in children with Angelman syndrome (AS).

The good news is that NNZ-2591 was safe and well tolerated as an oral liquid dose and improvements were seen in clinically important aspects of AS.

The release reveals that clinician and caregiver global efficacy measures specifically designed for Angelman syndrome showed a level of improvement from baseline that was statistically significant and considered clinically meaningful.

This is big news as there are currently no approved treatments for AS. This is despite its severely debilitating impact on the lives of patients, as well as their parents and siblings.

The data shows that every child in the younger age segment of 3-12 years showed improvement measured by both the CGI-I (mean score 2.8 p=0.0078) and the CIC (mean score 2.6 p=0.0078).

Furthermore, improvements were seen in clinically important aspects of Angelman syndrome, including communication, behaviour, cognition, and motor abilities.

But the company may not stop at AS. Management believes that the study further strengthens confidence in the potential of NNZ-2591 for multiple neurodevelopmental disorders.

Neuren CEO Jon Pilcher commented:

These results provide additional confirmation that NNZ-2591 as an oral liquid dose may address the core symptoms of diverse neurodevelopmental disorders, independent of the origin of the underlying genetics. We are very grateful to the people in the Angelman syndrome community and at the trial sites in Australia who enabled the successful completion of the trial.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 Scott Phillips.

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