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More very rough maths - DYOR.
Alkindi pricing in the UK https://www.sunderlandccg.nhs.uk/wp-content/uploads/2020/07/Alkindi-information-leaflet.pdf average of £3,697 per child, per year.
There are roughly 14.2m under 18's in the UK, and using the figure of 1 in 10,000 being affected by CAH (source NHS, states between 1 in 10k and 1 in 18k - using the former to allow for non classic CAH). The sales opportunity in the UK is around £5.25m from 1,419 patients.
As there are risks associated with the old method of dosing, I would expect UK take-up to be quick. I would also expect the same for Europe, my VERY rough calculations are as follows;
There are around 223m under 18's in Europe, 22,380 will be affected by CAH and assuming a similar price to the UK, this would generate £23.4m in revenues.
EU and UK together £28.7m. I think this figure should be quite achievable considering the safety improvements from Alkindi. What is really interesting is that the 2023 forecast turnover for DNL is £29.1m. This could be achieved from the UK and Europe alone, without the US, China and the rest of the world. And, from Alkindi alone (without Efmody).
My maths are rough and I have assumed a larger incidence of CAH to account for late onset CAH which affects 1 in 200 (I believe) at some point in life. I will review my maths for US and China at some point and post them later.
I'm not one for ramping, I prefer to discuss the facts, so I am quite encouraged by the potential sales here. The key though is GP take-up and prescription, hopefully the lower risk of Alkindi will help.
ALB
Looking at the Eton update, here are some really rough numbers;
One month's treatment is around $374, so they should get 12 (full) month revenue of $448,800 (100 patients) with the goal of 400 by year end would give full year $1.795m (400 patients).
Not too bad considering restrictions. The above are really rough and I need to do some more work on what DNL receive.
ALB
Bojo, that's great news. Trying to dig a little further but their website seems to have some problems.
Does anyone have views on the others in the shortlist that DNL are up against?
ALB
https://twitter.com/diurnalltd/status/1392756275092525065?s=21
No way would IP Group take over DNL, it’s not their mantra. More likely is they will sell off their stake when they realise a decent return. As another poster said, they’ve been in since the start so the holding RNS isn’t clear in that regard
Under aim rules, holdings above 30% would necessitate a takeover bid would it not?
Regardless of the technicalities, it is a very large holding IMO.
Often think these tr1 RNS releases are needlessly confusing but yes IP Group already a substantial Diurnal supporter
https://www.ipgroupplc.com/our-portfolio/portfolio/diurnal-ltd
I don't think the 30% shareholder is new, I believe they sponsored the company from the start, they have connections with many universities and I believe they develop start-up ideas / companies. They have just added on the open offer , I assume to maintain their percentage.
ALB
Seems we have a new almost 30% share holder: https://www.lse.co.uk/rns/DNL/holdings-in-company-mmwb2ipi9eqlh93.html
Another piece in the jigsaw today, positive RNS
It’s also funny how they ‘know’ when to buy in also lol
Eton update soon - 13th May
https://ir.etonpharma.com/news-releases/news-release-details/eton-pharmaceuticals-report-first-quarter-2021-financial-results/
Good to see institutional investors building positions through the placing, even though this is diluting small investors, funds are needed to grow the business. This can be done through borrowing or placing - both come at a shareholder cost.
Looking at the positive, we are coming out of pandemic, doctors will see patients again and sales will grow.
Institutional investors have access to teams of researchers, they are confident enough to build large positions.
Now we are out of the placing period, we should here news before the end of the month on the US plans for Efmody.
GLA
I think the China tie up went under the radar a bit.
https://www.lse.co.uk/rns/DNL/china-licencing-agreement-with-citrine-for-alkindi-qr9y06pqxl1wprh.html
I think news there could also be significant for the SP, although I do concede I am very fuzzy on likely progression re regulatory processes / timescales for this and whether existing data/trials can be used in their regulatory system.
But if Alkindi does achieve approval and sale in China then you would have to think that also bodes well for Chronocort.
China's vast population and increased focus on medical provision would present a substantial commercial opportunity for Diurnal.
FDA Special Protocol Assessment, I believe, is a pre-agreement on the design of the phase 3 trial. There seem to be advantages and disadvantages.
I don't believe the special protocol is in any way an accelerated approval and the timeline for the trial is still between 1 and 4 years, NEWS is due this month on the Special Protocol arrangement and perhaps this will include the timeline, is it possible the FDA may allow results from the EU trials?? I have no experience of this.
So, short term, IF the Special Protocol suggests a fast approval, this will benefit DNL in a number of ways;
- reduced cash burn (time waiting)
- closer to revenues in the US on Efmody
- positive news could well boost the share price
Chronocort (Efmody) failed previously in the US in 2018, since then, DNL has presented positive patient outcomes and of course EMA approval. So again, this may support a phase 3 trial at the faster end of the range.
ALB
Morning Scored,
I guess the question is "short term" or "long term", this placing is a no-win situation for private investors, it was all about giving the institutions a larger slice of the pie.
But from that point of view, the institutions are confident, and so confident that they are willing to pay a high price to acquire shares.
Shareholders are still valuing the company today at £99m, all things being equal, it will be worth £99m after the placing is complete. But there will be 30m new shares.
Long term, the prospects are fantastic, my question is can the management team deliver the pipeline ON TIME and WITHOUT further fund raising? Can the "adrenal franchise" start to fund future development?
Short term, there is little in the pipeline for approval until 2025; Efmody in the UK, there is Japan possibly, and Efmody in the US due 2025. UNLESS FDA Special Protocol Assessment changes this timeline - I am digging into this now.
ALB
BUY OR SELL whatever someone took the slack up - Watching close monday and ready to buy
It’s looking to bounce.
IF dnl drifts will add early 60/s risk reward great .Shame what happens here on open offers.I bought in last one at 60p went to 48 p .IM once bitten twice shy with shares . GLA all longs
Thanks Hunsen - my thoughts too but with such a combined dilution of existing shareholders over the last two placings it would have been encouraging to see a more aggressive uptake by management.
Agreed. They do have a decent LTIP which rewards shares if performance, aligned with shareholder interests is achieved.
This is minimal risk for them, skin in the game without the cost. I see this as quite positive.
Of course, they are also best placed to make decisions on buying, and the lack of buying doesn't give confidence. I don't see this as positive.
alb
HunSen - any thoughts on why the Diurnal directors subscription was so low - seems they have little skin in the game?
HunSen
Very concise due dilligence, thanks for the read.
Company seems to be running well.
My take on raising funds is that its a nececcary evil, better than the company stagnating or worse stumbling at lead candidate blockage without any other potential drugs coming through the testing phases.
As the company looks to place itself at the top of endocrinology there could be some hugh opening markets in adreanal exhaustion from our high stress and gaming societies.
A.
Some further thoughts on the placing;
- dilution effect is 16.8%, on the todays market cap, our shares will be worth 57.2p - HOWEVER, it's not just about the dilution, it is also about how the £19.1m raised will be used and how much closer to profitable this will push the company.
- the low discount seems to demonstrate that an II's cannot take a significant stake in DNL as on the whole, people are keeping hold of these shares, institutions are already holding 61.9% (pre offer) - I believe this will increase slightly post offer.
- the low discount is a very good sign of DNL confidence IMO, what we know about the take up so far is;
- The largest shareholder IP Group has 31.8% (pre offer) and has taken another 5.7m shares in the offer, IP Groups holding has been diluted slightly to 29.3% post offer - but the dilution is much less than retail investors (IP would only be able to take 909,000 shares under the same offer as retail investors. IP Group has invested another £4m (20% of the target raise).
- Interesting that a director of IP Group (Sam Williams) has also taken 28,571 shares (I assume a personal investment) which would be well over his open offer allowance.
- The CFO and a non-exec director have both taken a small number of shares, the CEO will take up 10,000 in the open offer (his entitlement is 12,000).
I have been reading about the price of placings, this is a quote from one of the sites I found "The placing price will usually be at a discount to the prevailing price. This is because investors in the placing will want cheaper shares. Rarely is a placing done at a premium because then the investors could just buy in the market for cheaper.
A good placing is done at a relatively modest discount. A stock that is deeply discounted can suggest that the quality of the company is poor due to lack of investor demand."
- the above confirms the shares are in demand and institutions are not only willing to pay close to full price, they are willing to take immediate dilution from the placing.
On WHO takes up the placing;
"The quality of the investors taking the placing is important. Would you rather institutional money who are going to hold their stock tightly? Or would you rather private investors who are looking to flip the stock and make a quick buck?
It can be useful to look out for holdings announcements to check which institutions followed their money. The merits of having a cornerstone investor who continuously backs the company can provide stability to the stock price when it comes to the placing agreement on the price."
- IP Group is a clearly very confident on this company which is one of their top 20 holdings
- I won't take the placing, my holding is too large a % of my PF and the discount is already poor value. I will remain a long term holder.
ALB