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Diurnal Group - US FDA agrees an SPA for Chronocort

The receipt of a Special Protocol Assessment (SPA) from the FDA for Diurnal’s Chronocort (Efmody in Europe and the UK) should smooth its regulatory passage, assuming that the Phase 3 trial endpoints are met successfully. An SPA is a process where companies meet with the FDA to agree on the design and size of clinical trials to determine whether they adequately address scientific and regulatory requirements for a study that could support marketing approval. An SPA does not guarantee approval, however, should reduce uncertainly.

Given the uncertainty which followed from the failure of the European Phase 3 study to meet its primary endpoint, we view the receipt of an SPA in the US as an important achievement. In addition, much has been learnt from the outcome of the European study to help ensure that the benefits of Chronocort are adequately reflected in the trial - particularly that Chronocort's delivery of hydrocortisone mimics the body's normal physiological release, and controls overnight androgens levels.

Development of Chronocort for the US is important commercially for Diurnal given the heightened awareness of congenital adrenal hyperplasia (CAH) due to the ongoing clinical trIals of the CRF1 inhibitors crinecerfont and tildacerfont (see our research note on evolving treatments). We believe that Chronocort should become the hydrocortisone preparation of choice, displacing the current use of generic hydrocortisone. The US study design should position Chronocort to fulfil its commercial potential. The150 patient trial compares treatment with Chronocort against 3x daily generic hydrocortisone over 52 weeks. We expect that Orphan status should facilitate the achievement of pricing premium for Chronocort in this key market Diurnal.

We calculate a DCF based fair value for Diurnal of 241p per share, which compares with a current share price of 63p.

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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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