… and more to come (news flow)

Diurnal (DNL) is a commercial-stage specialty pharmaceutical company focused on diseases of the endocrine system. Its two lead products are targeting rare conditions where medical need is currently unmet, with the aim of building a long-term ‘Adrenal Franchise’. Its first drug, Alkindi, is being rolled out through key European markets, and sales exceeded £1.1m in 1H’20. Despite unexpected Phase III trial results, positive feedback from the EMA has opened a pathway for regulatory submission of Chronocort for adult CAH and AI in Europe. Discussions with potential US partners for both products are also expected to crystallise in the first half of calendar 2020.

• Strategy: DNL’s 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 in Europe and the US, is to expand the product offering to other endocrine conditions.
• Advancing pipeline: Four market authorisations have been submitted by DNL and its commercial partners for Alkindi and Chronocort in key countries. In addition, a successful Phase I trial with DITEST in male hypogonadism has prepared DNL for discussions on the way forward with regulators in the US.
• US partner(s): DNL is progressing discussions in its search for a US partner for the sale and distribution of Alkindi, as well as clinical support for the Phase III Chronocort trials in CAH. The final outcome might be with more than one company, and an announcement is expected during 1H calendar 2020.
• Risks: Filing of Chronocort with the EMA has allayed some of the US concerns, but a partner is needed to run and fund a revised US Phase III trial in CAH. The time to conclude a deal with a US commercial partner remains uncertain, affecting the timing and quantum of the company’s need for more capital in 2020.
• Investment summary: Alkindi, a cortisol replacement therapy designed for children under 18 years of age, is DNL’s first product on the market. It is expected to be followed by Chronocort for adults – a larger market – which now has a clear pathway for regulatory approval in both Europe and the US. Despite this, the share price is still languishing well below valuations determined by peer group and DCF (344p) analyses, due possibly to the need for more capital during 2020.