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Hardman & Co

Diurnal Group First commercial revenues

Hardman & Co Report Report DownloadsDiurnal Group (LON:DNL) is a commercial-stage specialty pharmaceutical company focused on
diseases of the endocrine system. Its two lead products target rare conditions where
medical needs are currently unmet, with the aim of building a long-term ‘Adrenal
Franchise’. Following approval from the European Commission, Alkindi is being
launched in key EU markets through DNL’s own commercial infrastructure,
starting with Germany and now launched in the UK. Additional territories will
follow during 2018 and 2019. Meanwhile, the company is pushing forward with
Alkindi and Chronocort clinical trials in the US. Cash at the end of the period was
£17.3m.

Strategy: Diurnal’s strategic goal is to create a valuable ‘Adrenal Franchise’ that
can treat patients with chronic cortisol deficiency diseases from birth through
to old age. Once Alkindi and Chronocort are established in the EU and the US,
the long-term vision is to expand the product offering to other related
conditions.
Results: Reported operating losses of £16.98m (-£12.08m) largely reflect the
increased investment in R&D. This fell through the cashflow statement, leaving
the company with net cash at the end of June of £17.3m, including the
completion of a Placing for £10.5m gross in March.
First sales: The results provide the first 46 days’ sales figure for Alkindi in
Germany, at £73k. For the main European countries, there will be a staged rollout,
influenced by conclusion of pricing negotiations on a country-by-country
basis. Since 3 September, Alkindi has also become available in the UK.
Near-term milestones: Important value inflection points are due before the
end of calendar 2018: headline data for Phase III Chronocort in the EU; start of
Chronocort Phase III in the US; and readout of the US Phase III for Alkindi, which
will be followed by an end-of-Phase III review meeting with the FDA.
Investment summary: Alkindi, a cortisol replacement therapy designed for babies
and children, is Diurnal Group first product on the market. It will be followed shortly by
Chronocort for adults. The cortisol replacement market is for conditions that
need life-long treatments, and it has a potential value of $3.5bn. Diurnal Group will be
reporting on a number of potential valuation inflection points during the
remainder of 2018