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Diurnal significantly increases exposure to the Chinese market

The announcement of the addition of Efmody to the licensing agreement for China, Hong Kong, Taiwan, and Macau with Citrine Medicine is a testament to the commercial allure of Diurnal's adrenal franchise. Asia represents an important market and Citrine provides local presence and expertise, combined with a focus on rare diseases. As a result, we can expect Citrine to be a committed partner with the required know-how to ensure the rapid development of Alkindi and now Efmody.

For Diurnal, Alkindi and Efmody potentially provide lifelong control of excess cortisol in disorders such as congenital adrenal hyperplasia (CAH) and more generally in adrenal insufficiency. Efmody effectively mimics the circadian rhythm of cortisol release and has already proven adept at managing patients with CAH, particularly during the important overnight and early morning period. This has recently resulted in a positive recommendation in Europe from the CHMP. Diurnal has chosen to self-market Efmody in Europe and we anticipate US Phase 3 evaluation to start, following regulatory clarity (receipt of a Special Protocol Assessment from FDA). The partnership with Citrine Medicine with respect to Efmody provides a modest upfront payment of $1m as well as a potential further regulatory and sales milestones of $28.75m and up to mid-teens percent royalties on sales. In its entirety, we believe the addition to be an important endorsement of the market potential in Asia and the potential for Efmody to successfully treat CAH and AI patients.

We calculate a DCF based fair value for Diurnal of 241p per share, which compares with a current share price of 68p.

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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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