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
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
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
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
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
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
Even Eton are calling it an Orphan drug; (from Eton website)
Eton Pharmaceuticals Announces Availability of Orphan Drug ALKINDI® SPRINKLE (hydrocortisone) in the United States
November 24, 2020
ALKINDI ® SPRINKLE is now exclusively available through AnovoRx Specialty Pharmacy . To support patient access to ALKINDI ® SPRINKLE, Eton has established the Eton Cares Program ® . DEER PARK, Ill. , Nov. 24, 2020 (GLOBE NEWSWIRE) -- Eton Pharmaceuticals, Inc (Nasdaq: ETON), a specialty
https://ir.etonpharma.com/news-releases?a9d908dd_year%5Bvalue%5D=2020&op=Filter&a9d908dd_widget_id=a9d908dd&form_build_id=form-oco8-vUVCqz0d88RUC2vnWnou13rMMbdOjtFJLPXOv4&form_id=widget_form_base
This FDA website lists as Orphan
https://www.accessdata.fda.gov/scripts/cder/daf/index.cfm?event=overview.process&ApplNo=213876 (select one of the drop down boxes).
It seems very unclear, no doubt confirming orphan status is just a formality - but these milestones should have been clearer.
Thanks Balanced, the details of that payment just seemed a little opaque to me - I believe it had many other posters here confused too as many were looking out for that milestone payment.
It seems a little odd to me that DNL would let Eton sell the product, but not take the milestone payment.
You are correct though, it is in both RNS (although it's not at all clear).
ATB
I was not sure about this line in the recent fundraise RNS (in particular the section between ** **);
"As at 31 March 2021, the existing cash and cash equivalents (unaudited) held by the Group were £18.0 million. In addition to these cash resources, the Company currently holds 379,474 freely transferable shares in Eton Pharmaceuticals Inc ("Eton") that were received as part of the upfront consideration for the exclusive licence agreement of Alkindi® Sprinkle in the US. **Diurnal and Eton are also awaiting confirmation of Orphan Drug Status of Alkindi® Sprinkle from the FDA, which will trigger a $2.5 million milestone payment to Diurnal**."
This seems inconsistent with a previous RNS (following), posters on this board have long been waiting for a milestone payment from ETON on the first sale of Alkindi, the following RNS is poorly worded IMO. I am not sure if there have been any US sales.
This was the RNS from September 30th (the day of US approval for Alkindi)
"Diurnal has partnered with Eton Pharmaceuticals for the commercialisation activities of Alkindi® Sprinkle in the US, including pricing and reimbursement. Eton will initially use product from Diurnal's European Alkindi® supply chain, with an option to establish its own supply chain in the US in the future. As previously announced, under the terms of the licensing agreement, Diurnal will receive a $2.5m cash milestone payment upon first commercial sale of Alkindi® Sprinkle in the US following grant of Orphan Drug Status. The Company will also receive a tiered royalty on sales ranging from low double-digits to high teens and is due tiered sales-based milestone payments of up to $45 million in aggregate subject to annual sales thresholds. These payments are in addition to the upfront payment of $5.0m received by Diurnal upon signing the contract with Eton in March this year."
Hi DD77, the main flag for me is the following quote;
"As at 31 March 2021, the existing cash and cash equivalents (unaudited) held by the Group were £18.0 million. In addition to these cash resources, the Company currently holds 379,474 freely transferable shares in Eton Pharmaceuticals Inc ("Eton") that were received as part of the upfront consideration for the exclusive licence agreement of Alkindi® Sprinkle in the US. ****Diurnal and Eton are also awaiting confirmation of Orphan Drug Status of Alkindi® Sprinkle from the FDA, which will trigger a $2.5 million milestone payment to Diurnal."***
The section highlighted by *** in particular, I thought this was already long resolved, the question for me is are Eton even selling Alkindi yet? There was a milestone payment due on first sales but nothing so far. This was mentioned a few times on this board but has been overlooked now due to Chronocort / Efmody news.
A delay in sales / orphan status? Does this mean we have been burning cash for months? DNL have been tight lipped on early US sales.
Olderandwiser, I'm not looking to get back in lower, I have been holding this share since it was 24p, and I have taken previous placings as they were at a reasonable discount at the time.
Like goosedeye, I am not looking to accumulate.
There are a number of decent posters on this board who are happy to discuss the company in detail and who also realise that eight posts on a board like this don't actually move the market (up or down).
I also appreciate R&D costs money, but there were a couple more red flags in the RNS which are a little concerning.
ALB
Another fundraise was expected, but this one is at a minimal discount, this is good for the company (cheap finance) but not so good for shareholders.The current shares in issue are 138.3m, on a market cap of £96.8m , that's 70p per share (the price today).The placing plans to raise £20m through issuing some 28.5m new shares, this takes the new shares in issue to 166.8m.That's a big chunk of the current issue, what concerns me is that if nothing happens to improve the market cap, the new share price (market cap / number of shares) will be 58p. I'm struggling to work out how taking part in this fundraise is good value (for small shareholders or institutions). My only thoughts are as follows;- there is imminent good news which will raise the market cap- the USA opportunity will be on an accelerated approval (current estimate is 2025 for approval)- DITEST is also estimated for 2025, so I don't understand the delay on EfmodyPlease correct me if I am wrong, whether you take up this placing or not - your shares will be diluted in the same way due to the lack of discount (the dilution is around 17%).Any thoughts?
Hey Scored, where did you find his pay details? I have outlined the Long Term Incentive Plan (LTIP) a couple of times and this can be found in the RNS archive. One key metric for his (their) reward is the share price SUSTAINED above £1.
I assume you mean Martin, I know you are on SharePad as I see you in the chat talking to support :-), take a look at the DD tab, he doesn't seem to have many more shares than me (unless that is cash and not shares)? But Richard Ross has 2.22m shares.
I have great confidence in DNL but it's also the most frustrating share I own.
One interesting thought on the latest RNS is that withdrawing orphan designation on Efmody may well be paving the way for applying the drug for non-orphan purposes (e.g. Addisons).
From my limited research, "orphan" is more rare than Addisons (which is just rare!).
Hey Scored, sorry, I had a manic week at work and have had very little time to respond to anything else.
Yes, I have spotted AGY on a SharePad screen and done a bit of research, it's on my list and you are right ,looks quite interesting. One of my recent work assignments was in a baby food manufacturer and they take allergens incredibly seriously. Strict segregation which is audited by BRC and the top retailers, the site was strictly "no nuts" - not even in the staff room or car park.
So this is certainly an interesting market which is potentially a game changer for an increasing allergy problem.
I will certainly continue my research and keep watching. Thanks for the suggestion.
Hey Scored, that's funny, I also brought Shield only yesterday on the basis of their products and the share price drop looked a bit overdone, 11% gain on the first day, doesn't quite offset the DNL drop but it helps.
New research note from Edison