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Diurnal Group - Globalisation of the adrenal franchise

Efmody’s European marketing approval represents a major step towards realising the group’s global adrenal franchise ambitions. We publish a research note today outlining prospects for Efmody.

Diurnal has a market cap of only £105m. The company now has two authorised products addressing a combined market opportunity of approximately $350m. Efmody was recently licensed to rare disease specialist Citrine Medicine for key Asian markets, and

Diurnal will shortly recommence its Phase 3 study in the US.

Alkindi has been available in Europe since 2018; so Efmody will be able to capitalise on Diurnal’s ready-made endocrinology sales platform. Both Alkindi and Efmody’s attributes mean many patients will see improved treatment outcomes, and Diurnal should be able to capture large market shares.

After the recent funding round, the company has a strong balance sheet allowing it to restart Efmody’s US Phase 3 development. The prospect of an FDA Special Protocol Assessment would provide clarity on the Phase 3 design, and should expedite development. Also, we believe that the experience and lessons learned from Efmody’s European Phase 3 study significantly improve the chances of US success. Efmody already has Orphan drug designation for both CAH and AI in the US which provides longer exclusivity and a potentially stronger market position.

Diurnal’s current valuation overlooks the much larger adrenal insufficiency opportunity for Efmody. In Europe alone this is a $1.8bn market opportunity. With Efmody now approved for CAH, the regulatory pathway for AI appears uncomplicated and Diurnal intends a to conduct a comparator study with incumbent Plenadren for optimal market positioning. All going to plan, we would expect Efmody AI approval in Europe towards the end of 2023.

We calculate a DCF based fair value for Diurnal of 241p per share, which compares with a current share price of 69.5p.

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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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