The MHRA's approval of Efmody this morning represents another important endorsement of the strength of the data supporting its efficacy and safety in patients with congenital adrenal hyperplasia (CAH). The availability of Efmody in the UK fleshes out the adrenal franchise. Efmody provides a hydrocortisone preparation that mimics its physiological release, thereby better-controlling complications of CAH, including overnight androgen build-up and the risk of life-threatening adrenal crises. Additionally, it should deliver operating leverage to the UK operations. As we have highlighted previously, we remain optimistic regarding the rollout of Efmody in Europe and the UK, given the already well-established commercial infrastructure and look forward to details of sales progression after launch.
The positive news follows the successful EU approval of Efmody in May and allows Diurnal access to a combined $250m market for Efmody.
Diurnal has a robust balance sheet and commercial opportunities of approximately $350m in Europe and the US for already approved products. This strong position allows the restart of Efmody’s US Phase 3 development. We believe that lessons learned from Efmody’s European Phase 3 study significantly improve the chances of US success. In addition, Efmody already has Orphan drug designation for both CAH and AI in the US, which provides extended exclusivity and a potentially enhanced market position.
We think that Diurnal’s current valuation overlooks the prospects for Efmody in Europe and the much larger adrenal insufficiency opportunity. In Europe alone, AI represents a $1.8bn market opportunity for Diurnal. With Efmody now approved for CAH in Europe, the regulatory pathway for AI appears uncomplicated, and Diurnal intends 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.