The market may be nearing a record high, but that doesn't mean there aren't big potential gains to be made.
For example, the ASX 200 share in this article, which is swimming in cash, has been tipped rise very strongly from current levels.
Which ASX 200 share?
The share in question is Neuren Pharmaceuticals Ltd (ASX: NEU). It is a biotechnology company targeting disorders of the central nervous system.
Its lead asset is Daybue (trofinetide) which has been licenced to Acadia Pharmaceuticals (NASDAQ: ACAD). It also has a number of promising products under development that could drive future growth.
Bell Potter has been pleased with the company's performance, noting that Daybue sales are in line with expectations. It said:
Overall, a positive update considering the two prior quarters were below market expectations. Daybue appears to have entered a more steady-state phase in the US following the initial surge in demand in the first few months post launch. We continue to expect modest annual US Daybue sales growth in CY25-CY26, bolstered by geographical expansion into Canada (first sales likely CY25) and Europe (first sales likely CY26).
But the big news was that the ASX 200 share has received another major cash windfall from its partner. Bell Potter highlights that this gives Neuren a significant cash balance, which is likely to increase further. It adds:
NEU will receive two US$50m (~A$76m) cash milestones in Q1 CY25 from the sale of the priority review voucher by Acadia and CY24 annual sales reaching >US$250m. Therefore, with cash balance as at 30-Sep-2024 of A$210m, plus ~A$150m in milestones to be received in 1Q CY25, we expect NEU will have >A$350m in cash as at 1Q CY25, more than enough to fund at least two Phase 3 clinical trials for NEU's second asset, not to mention ongoing royalties in CY25 and beyond.
In light of this, the broker has reaffirmed its buy rating and $25.00 price target. Based on its current share price of $16.33, this implies potential upside of 53% for investors. It concludes:
We have updated our near-term forecasts to reflect the PRV sale timing and the assumption that NEU will internally fund multiple Phase 3 trials for NNZ-2591 over the next few years. Our BUY recommendation and $25.00 PT remains unchanged. Roughly $10/share of our valuation is attributed to Daybue licensing income, hence our BUY recommendation is driven by a positive view on NNZ-2591. The next steps for NNZ-2591 are further FDA engagement on the Phase 3 design in PhelanMcDermid syndrome, likely in 1Q CY25, followed by starting the Phase 3 trial in CY25.
