The trading update from Diurnal today is a timely reminder of the significant achievements made by the company as it endeavours to commercialise its adrenal franchise. While revenues from Alkindi are modest, they remain in line with our forecasts. The success here is reflected in the majority of newborns in key markets receiving treatment with Alkindi. This bodes well for future growth and for the rollout of Efmody in Congenital Adrenal Hyperplasia (CAH) – a much larger market opportunity.
As a rare disease, CAH is suited to a small specialised salesforce. The receipt of a Special Protocol Assessment (SPA) from FDA should help de-risk the US clinical programme as well as the regulatory pathway assuming results are positive. All going to plan, Efmody will be the only licensed modified-release hydrocortisone in the US approved for the Orphan CAH indication.
New information provided today was the Japanese Pharmaceuticals and Medical Devices Agency has agreed this study will be sufficient for regulatory submission in Japan.
Diurnal is one of the few UK biotech companies which has been able to fund, develop and commercialise its own products in important territories. This allows it to retain the full margin and ultimately re-invest profits in the development of its pipeline. Accomplishments so far are reassuring.
With £34m in cash, Diurnal is in a strong position to develop Efmody in the US and Japan. Additionally, the Adrenal Insufficiency indication looms large, strengthened by the knowledge that CRF-1 inhibitors in development are not relevant. With funding secured, Diurnal is well placed to progress all of these plans as well as the development of DITEST - a potentially differentiated testosterone replacement therapy - while achieving sustainable profitability.
Diurnal is well on its way to achieving its goal of becoming a global endocrinology company with an initial focus on low cortisol disorders such as AI and CAH. All eyes are on the launch of Efmody in Europe and the UK in Q3. We look forward to updates as Diurnal further evolves as a commercial-stage company.
We calculate a DCF based fair value for Diurnal of 241p per share, which compares with a current share price of 60.5p.
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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.