September 2021 Investor Forum

Aiming to become leading endocrine player

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 aim of becoming a global endocrine leader. Alkindi®, soon to be accompanied by Efmody®, continues to be rolled out throughout Europe. Diurnal is about to start three important clinical trials, which, if successful, will extend the commercial opportunity and deliver on its strategic goal. Its current cash resource is expected to be sufficient to complete these trials and to get Diurnal’s core commercial European cortisol deficiency franchise through to profitability.

• 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 Efmody are established, is to expand the product offering to other endocrine conditions.
• Outlook: In the next 12 months, Diurnal is aiming to achieve sales traction with Efmody in Europe and to commence three clinical trials: CHAMPAIN to expand use of Efmody from CAH to include AI; CONNECT to obtain regulatory approval of Efmody in the US; and a Phase I DITEST™ multiple ascending dose study.
• Valuation: Based on our DCF model, the risk-adjusted NPV is $335m/£240m, or 142p per share. Also, the current EV suggests upside potential when compared with a peer group of specialty endocrine companies. This sector is also attractive, as evidenced by Amryt’s (AMYT.L) recent acquisition of Chiasma for $331m.
• Risks: Penetration of the market with Alkindi was hampered by the pandemic during the past 12-18 months. Further penetration, coupled with the launch of Efmody, is dependent on patients being able to attend hospitals and specialist clinics. Diurnal may need a partner to maximise the US Efmody opportunity.
• Investment summary: Diurnal is in a good position, with regulatory approvals in Europe (Alkindi, Efmody) and the US (Alkindi) and a strong cash position. The medium-term goal is to drive its European cortisol deficiency franchise through to profitability, while simultaneously investing in the three important trials. Efmody is a very large commercial opportunity and its launch should act as a catalyst for the shares to move nearer to our NPV of 142p per share.