ASX 200 healthcare stock sinks 9% on FDA update

Neuren Pharmaceuticals Ltd (ASX: NEU) shares have returned from their trading halt and are deep in the red.

In morning trade, the ASX 200 pharma stock is down 9% to $13.30.

Why is this ASX 200 stock sinking?

Investors have been selling the pharmaceuticals company’s shares on Thursday after it provided an update from the US Food and Drug Administration (FDA) on the next steps for its second drug candidate, NNZ-2591.

According to the release, the FDA has given Neuren a clear pathway forward for advancing NNZ-2591 in two rare neurological conditions, though some additional work will be required.

What is NNZ-2591?

NNZ-2591 is the ASX 200 stock’s follow-on drug behind trofinetide (DAYBUE), which is already approved in the US for Rett syndrome.

It is being developed for multiple serious childhood neurological disorders, including hypoxic ischemic encephalopathy (HIE) and Pitt Hopkins syndrome (PTHS).

Neuren recently met with the US Food and Drug Administration to clarify what is required to move these programs into later-stage clinical development.

For HIE, which is a severe form of brain injury in newborns, Neuren plans to submit an Investigational New Drug (IND) application so it can begin clinical trials in infants.

The FDA generally agreed with Neuren’s proposed initial study design and dosing. However, it asked the company to provide additional juvenile animal study data to better support dosing in newborn babies before trials can begin.

Neuren said it plans to generate this data before submitting the IND and still expects to commence the first HIE clinical study later in 2026. Importantly, management said this feedback does not materially change the cost or funding position of the program.

Pitt Hopkins

Pitt Hopkins syndrome is an extremely rare and severe neurodevelopmental disorder.

The FDA has provided guidance on how the ASX 200 stock could structure a future trial to prove NNZ-2591 works.

The regulator indicated that Neuren may use a condition-specific clinical global assessment, as long as it is paired with an observer-reported functional measure. This is similar to the approach already being used in Neuren’s ongoing Phase 3 trial for Phelan-McDermid syndrome.

Because Pitt Hopkins is rarer and more disabling than related conditions, Neuren is still assessing the best trial design and expects further discussions with the FDA. Even so, the company still plans to initiate the next Pitt Hopkins trial in 2026.

Disappointment continues

This update comes just two days after the ASX 200 stock fell sharply following news that its partner, Acadia Pharmaceuticals (NASDAQ: ACAD), received a negative trend vote from European regulators for trofinetide in Rett syndrome.

That development weighed on sentiment, even though trofinetide is already approved and generating revenue in the US and other markets.

The post ASX 200 healthcare stock sinks 9% on FDA update appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Neuren Pharmaceuticals shares FDA meeting feedback on NNZ-2591 clinical programs
• Neuren Pharmaceuticals shares paused pending announcement
• Are these 2 ASX healthcare shares a buying opportunity after yesterday’s crash?
• Why Brainchip, Credit Corp, Graincorp, and Neuren shares are falling today

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.