“Things are worse”: Neuren Pharmaceuticals shares sink as wonder drug questioned

• Neuren Pharmaceuticals (ASX:NEU) shares are tanking on news its US partner allegedly mischaracterised the safety of a drug for children
• The findings come from a short-selling firm
• That firm, Culper Research, reports the drug hospitalises roughly 1-in-10 children who use it
• Shares are down 13.5 per cent, trading at $19.95 at 1:52 pm AEDT

ASX-listed Neuren Pharmaceuticals’ (ASX:NEU) shares were down more than 13 per cent in lunchtime trades as the company is caught up in a short seller stoush.

Neuren is the Australian partner of a US company touting a wonder drug for a rare condition that has been accused of sending roughly 1-in-10 patients to hospital.

US-based Culper Research has come for NASDAQ-listed Acadia Pharmaceuticals in its latest report with which Neuren has enjoyed a partnership.

What’s this about?

Acadia’s strategy to treat Rett Syndrome, a genetic condition that causes neurological damage, is a drug called Daybue, or trofinetide.

Acadia acquired trofinetide from Neuren Pharmaceuticals in 2018, Culper wrote on Thursday US time.

But now, Culper Research is suggesting the drug isn’t as safe as Arcadia has let on.

Trofinetide is seen as something of a miracle for parents with children who suffer from Retts.

The drug is the only to be approved by the US-based FDA for specific use in children aged 2 or above with the condition.

One paper written by Muhammad Furqan called trofinetide a “new chapter” in the treatment of the syndrome.

But Culper Research isn’t so sure and has taken out a short position in Acadia’s NASDAQ-listed stock.

1-in-10 hospitalised

The short sellers’ report starts off with two unattributed quotes, presumably from the parents of children with Retts, which ultimately state Daybue doesn’t work.

One quote actually suggests that a child with Retts worsened after using the drug and exhibited no signs of improvement.

“It is with great sadness that we will be stopping Daybue… No one has seen any improvements, but have pointed out that some things are worse,” the italicised sentence reads, quoted only as having been said on January 10.

“We believe ACADIA’s April 2023 launch of Daybue – the company’s highly-anticipated “first and only” drug to treat Ret Syndrome – has been a total flop,” authors of the Culper report wrote.

“[Acadia] has constantly characterized Daybue’s side effects as mild and manageable, but our analysis of FAERS data suggests that roughly 1 of every 10 to 11 Daybue patients end up hospitalized.”

Much of Culper’s report then goes on to look at patient retention rates, and the firm suggests that Daybue usage is probably already at its peak.

While the short sellers are more concerned in the Acadia share price performance than the ethical quandry of advertising an allegedly dangerous drug as safe, the fall in Neuren has been significant.

Culper only named Neuren three times in the report, but, clearly, the market is paying attention to the allegations.

Neuren shares were down 13.5 per cent, trading at $19.95 at 1:52 pm AEDT.