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Diurnal Group - Er-Kim distribution agreement

The announcement this morning that Diurnal has extended its existing distribution agreement for Alkindi and Efmody with Er-Kim to include Bulgaria and Romania adding to the previous agreement for Turkey reflects the desire by Diurnal to ensure that not only will these distribution agreements maximise the commercial potential of its adrenal franchise but also that as many patients as possible will benefit from their availability. Er-Kim is an interesting distribution partner with aspirations to bring treatments for unmet needs into Turkey as well as other European and Middle Eastern countries. Under the terms of the agreement, Er-Kim will benefit from exclusive rights to distribute and market Diurnal's cortisol replacement products for the treatment of patients with low cortisol disorders. Alkindi represents a paediatric formulation of hydrocortisone, while Efmody provides physiological cortisol levels mimicking the body's diurnal rhythm. Efmody reduces the build-up of overnight androgens and the risk of an adrenal crisis in patients suffering from the genetic disorder congenital adrenal hyperplasia. We believe Efmody to be the more important product commercially for Diurnal. Following the formal European approval of Efmody, this is an important period for Diurnal as it undertakes market access activities ahead of country-by-country commercial launches of Efmody starting in Q3 2021. We remain sanguine given the existing commercial platform established following the launch of Alkindi and expect significant operating leverage in Europe following a successful Efmody launch.

We calculate a DCF based fair value for Diurnal of 241p per share, which compares with a current share price of 64p.

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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.



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