RE: tipped in the TIMES11 Oct 2020 21:49
Hidden among the early-stage drug developers listed on AIM is a rare gem: one that already has a product on the market.
Diurnal is one of only three such companies to have had a medicine approved in the US. With Diurnal, it is a treatment for children deficient in cortisol, a hormone that helps the body react to stress by increasing the metabolism of glucose and controlling blood pressure.
The Cardiff-based company, founded in 2004 after it was spun out of Sheffield University, specialises in targeting hormone deficiencies.
Last week, it announced plans to raise about £10m, which it will use to complete an early-stage trial of a new drug, Ditest, in America. Ditest is a pill for hypogonadism, a male condition where the body does not produce enough testosterone. Existing treatments are mostly topical (creams), which can cause safety issues. Analysts predict that this drug, if approved, has blockbuster potential, meaning it could achieve sales of $1bn (£770m) a year.
Diurnal said on Friday that it would raise the cash at 60p a share, raking in £8m via a conditional placing and a further £2m through an open offer. The shares, which have more than doubled since July, closed at 63p, giving the company a value of £76.9m.
Diurnal, which arrived on the junior AIM market in 2015 when it reversed into an existing company and raised £30m, wants to become a global player. It plans to avoid developing treatments for diabetes, a field already dominated by pharma giants Sanofi and Novo Nordisk, instead focusing on conditions where the medical need is unmet.
Its first product, Alkindi, was approved in Europe in 2018 and has recently been approved in America, too. Alkindi is a treatment for patients with adrenal insufficiency, which occurs when the adrenal glands do not produce enough cortisol. The most common symptoms are muscle weakness, fatigue and weight loss.
Diurnal has partnered with a US pharma company, Eton, to commercialise Alkindi, which is aimed at under-18s, and is expected to reach peak sales of $100m. Diurnal will receive royalties. It is also working on an adult version, Chronocort — expected to be an even bigger seller.
Analysts at research firm Calvine suggest Diurnal will remain loss-making until 2023. However, if it is successful in finding partners for Chronocort and Ditest, upfront payments should follow. Panmure Gordon, its broker, has put an 84p target on the stock; Calvine thinks its value is closer to 99p. The natural rhythm of this one looks like a winner. Buy.
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