All set for three pivotal trials

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. The results presentation highlighted three important clinical trials that are due to start in 2H’21 and aimed at delivering on the company’s strategic goal. The 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.
• Finals: The July trading update had already stated that 2021 proforma sales were in line with forecasts, at £2.46m (£2.39m), up 7%. However, this hides the fact that Alkindi sales were up 18% in core markets, despite COVID-19, offsetting the decline in distributor purchases. Diurnal had period-end net cash of £34.0m.
• Outlook: The target for the next 12 months is to invest in the core commercial European cortisol deficiency franchise – to improve penetration of Alkindi and launch Efmody successfully – and Diurnal’s development pipeline. Management has made very clear what cash will be used for and what will, or will not, be funded.
• 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.