The Diurnal investment case has focused mainly on Alkindi and Chronocort. With funding secured, we believe that investor interests should turn to the earlier stage pipeline, and particularly DITEST, Diurnal’s differentiated testosterone replacement therapy (TRT). The global TRT market is huge, and there remains an unmet requirement for a safe and effective oral therapy. DITEST could provide the answer.
The TRT market is dominated by injectable and topical treatments where compliance rates are poor. Oral product development has been fraught with difficulty, and Diurnal’s DITEST has the potential to be best-in-class. DITEST is early in development and consequently outside our current forecasts, however, our analysis suggests that even a modest share at 3% of the US TRT market could generate in-market sales of $1.5bn.
In a proof of concept study, DITEST restored testosterone levels to within the normal physiological range for young adults and with less variability than current treatments. Additionally, the FDA has confirmed that DITEST can be developed using the 505(b)(2) branded generic pathway. This route should allow faster development, significantly lower cost and less risk.
We have a calculated a discounted cash flow fair value of 99p per share for Diurnal Group. See the full research 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.