# Diurnal Group $52.5m US deal strengthens balance sheet further

- Link: https://www.directorstalkinterviews.com/diurnal-group-52-5m-us-deal-strengthens-balance-sheet-further/412810527
- Published: 2020-03-30T15:07:22+01:00
- Author: Amilia Stone

**Diurnal Group PLC** (LON: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’. Alkindi® is currently being rolled out through 
key European markets and has been submitted to the FDA for approval, with a PDUFA
date set at 29 September 2020. Meanwhile, Diurnal has signed an exclusive US commercial
deal with Eton Pharmaceuticals, a specialty pharma company focused on hospital and
paediatric products. This, together with the recent Placing, has strengthened the
balance sheet.

 * **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.
 * **Alkindi:** Diurnal has announced an exclusive US licensing agreement with Eton
   Pharmaceuticals (Eton) for the commercialisation of Alkindi Sprinkle, as it will
   be known. Eton is paying Diurnal $5m upfront, in cash and shares, and pre-set
   milestones worth up to $47.5m in total, plus royalties on net sales.
 * **Placing:** This deal comes shortly after Diurnal concluded a successful Placing
   of 34.89m new Ordinary shares at 32p per share to raise gross funds of £11.2m(
   £10.7m net) to strengthen its balance sheet. These funds will be used predominantly
   to progress the commercialisation of Alkindi and Chronocort.
 * **Risks:** Ideally, Diurnal would have liked to sign a deal that also included
   rights to Chronocort. Given the deal with Eton, this is now going to be a two-
   stage process and Diurnal will continue to seek a partner for the US development
   and commercialisation of Chronocort. This could be with Eton or another party.
 * **Investment summary:** The shares have been languishing for three reasons: global
   macroeconomics denting general market conditions; poor sentiment towards UK biotech;
   and the market’s knowledge that Diurnal Group needed to strengthen its balance
   sheet. The recent Placing together with the Eton licensing deal have greatly 
   strengthened its balance sheet and with several further announcements likely,
   the market should become more appreciative of the opportunity.

[DOWNLOAD THE FULL REPORT](https://www.hardmanandco.com/wp-content/uploads/2020/03/Diurnal-US-commercial-deal-30-Mar-2020.pdf)

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