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Diurnal Group Plc

Attention turning to Chronocort®

25 Feb 2021 / Corporate research

Diurnal is a commercial-stage specialty pharmaceutical company focused on diseases of the endocrine system. Its drugs target conditions where medical need is currently unmet, with the long-term aim of building an “Adrenal Franchise”. Alkindi® is being rolled out by Diurnal throughout Europe and has been launched in the US by its commercial partner, Eton Pharmaceuticals (ETON). The European and UK regulators are currently reviewing the submissions for marketing authorisation for Chronocort, with approval possible in the next month. Also, DITEST now has a clear regulatory pathway, and the development funding in place.

  • Strategy: Diurnal’s near-term goal is to create a valuable “Adrenal Franchise” that can treat patients with chronic cortisol deficiency diseases from birth and for the rest of their lives. The long-term vision, once Alkindi and Chronocort are established, is to expand the product offering to other endocrine conditions.
  • Alkindi: In the more established markets of Germany and the UK, sales in 1H’21 grew at ca.29%. However, reported numbers were impacted by distributor buying patterns, and COVID-19 affected the rollout in other EU countries. First US sales and approvals in Australia and Israel augur well for the future.
  • Chronocort: All eyes will turn to Diurnal’s second product, Chronocort, in the next month, given a realistic prospect that the EMA will make its recommendation regarding marketing approval. The valuation uplift is considerable given that the Chronocort commercial opportunity is many times larger than that for Alkindi.
  • DITEST®: On the back of good Phase I data, Diurnal moved quickly with the FDA to establish the regulatory pathway for DITEST in the US. With this confirmed, Diurnal asked shareholders to fund the clinical programme to accelerate development and thereby retain all rights for this high-potential drug.
  • Investment summary: Given the rapid progress made with DITEST in the US, we have added this to our DCF model. Although this added 10p to our risk-adjusted NPV, the rise was offset by reassessing currency, leaving our NPV at 214p. The considerable flow of positive news already this year has not been reflected in the share price. This will likely change on a positive Chronocort marketing recommendation from the EMA/MHRA, due by the end of 1Q’21.
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