We published a research note exploring the various emerging treatment options for patients with cortisol deficiency and their relevance for Diurnal Group's Chronocort.
Chronocort is on the verge of a European regulatory decision for Congenital Adrenal Hyperplasia (CAH). Should it be approved, Chronocort's novel delivery mechanism will provide patients with a treatment that replaces the deficient hormone in a way that more aptly mimics the body's natural release.
The most common cause of CAH is the absence of an enzyme called 21-hydroxylase. Without this enzyme, individuals are unable to make cortisol, the body's stress hormone. A lack of cortisol can lead to potentially-life threatening adrenal crises, hence the requirement to replace cortisol using synthetic steroids such as Chronocort.
Another consequence of an absence of 21-hydroxylase is an increase in the levels of androgens in the body. High androgen levels can cause early puberty and short stature; in women, it can result in the development of masculine physical traits.
All CAH patients are different, and consequently, the challenge for treatment is balancing therapies to provide optimal control of androgens while avoiding excess cortisol levels.
Recent advances in the development of CAH treatments should bring significant benefits to patients. The drug candidates have rightly caught investors' imagination in the US. Both Spruce Biosciences and Neurocrine Bioscience are developing CRF-1 inhibitors which aim to alleviate CAH symptoms in a different way than Diurnal. Rather than replacing cortisol, Spruce and Neurocrine's therapies seek to reduce patients' high androgen levels. Patients will still require cortisol replacement, however, potentially at a lower dose. The point here is that CRF-1 inhibitors and Chronocort can co-exist, and together provide better patient outcomes.
Diurnal has missed out somewhat on the rerating of these CAH drug developers. This is surprising when we consider that Chronocort can also address the considerably larger Adrenal Insufficiency (AI) segment. AI patients do not suffer from excess androgen accumulation, and therefore CRF-1 inhibitors do not have a role. The CAH addressable market in Europe and the US is estimated to be around $350m, whereas the AI market is approximately $2.8bn. The development of Chronocort for AI in Europe looks straightforward, with regulatory feedback suggesting that no additional clinical data would be required should Chronocort be approved for CAH.
We have a calculated a fair value of 99p per share for Diurnal Group, which discounts some of the risk associated with the forthcoming EMA regulatory decision.
Full note here
IMPORTANT:
Diurnal Group is a client of Calvine Partners and as such, this publication is not independent and should be considered a marketing communication under FCA Rules. None of the information contained in this publication should be considered as any form of advice.