The EMA's recommendation to approve Efmody (formerly known as Chronocort) for the treatment of congenital adrenal hyperplasia (CAH) should be transformational for Diurnal. (See full research note here).
The decision removes a key uncertainty that has overshadowed Diurnal's investment case.
Efmody's approval in Europe for CAH will allow access to an addressable market of circa. $250m per annum. It should be a relatively straightforward commercial opportunity for Diurnal, thanks to the existing Alkindi infrastructure and the limited number of centers that treat CAH patients. An approval also facilitates Efmody's route to the significantly larger Adrenal Insufficiency (AI) opportunity. In Europe, the regulatory pathway for AI appears uncomplicated, with Diurnal conducting a comparator study with Plenadren for optimal market positioning. The European AI addressable market for Efmody is approximately $1.8bn. All going to plan, we would expect Efmody AI approval in Europe towards the end of 2023.
In the US, awareness of CAH has grown, and Diurnal can now move forward with Efmody's US development. The next step will be agreeing on a Phase 3 study design with the FDA. The US CAH and AI addressable markets are estimated to be worth over $1bn.
Following today's news, we have revised our financial forecasts and valuation, increasing the probability of the US CAH opportunity, as well as the more significant European and US Adrenal Insufficiency indications. We have also reduced the discount rate in our DCF from 20% to 15% which generates a fair value of 241p per share. (See full note here).
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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.