Diurnal Keeps Its IPO Promises

by: EP Vantage

As one of the companies that managed to squeak past the finish line and get its flotation away in London just as markets were tightening, Diurnal has been watched to see if it can offer any clues as to the state of the sector’s health.

So far the spinout from Sheffield University has not disappointed. Last week Diurnal reported positive phase III data for its lead asset, Infacort, in pediatric adrenal insufficiency (NYSE:AI), moving European approval closer. Speaking to EP Vantage Martin Whitaker, its chief executive, says: “We are on track to deliver what we set out to do at IPO, which was to file for market authorization for Infacort by the end of this calendar year.”

An end of year filing should see Diurnal’s first product, which has been granted additional patent protection through the pediatric use marketing authorization (PUMA), on the EU market in 2018.

The size of the opportunity

Adrenal insufficiency is caused by deficient levels of cortisol, the hormone that regulates metabolism and responses to stress. Children with AI often suffer from chronic fatigue, can be more susceptible to infection and can have fertility and growth problems.

Diurnal believes that there are up to 4,000 children under six suffering from AI in Europe that could benefit from Infacort. And with such a small patient population Diurnal is going to go it alone: “If you look at the number of endocrinologists you have to approach we can achieve that with a very modest sales force," Mr Whitaker says.

At present the standard of care for pediatric AI in the US and EU is unlicensed pharmacy-compounded preparations of generic hydrocortisone tablets reconstituted into sachets or capsules in lower doses for children. Diurnal argues that this type of compounding is not only unregulated, but has variable quality.

While there are undisputed benefits for parents knowing that Infacort will be a regulated product designed for pediatric use, there is still the issue of the price of an approved product versus a compounded one.

This, Mr Whitaker argues, is missing the point: “I think a lot of people think that generic products are cheap and cost pennies, which is true for many, but the cost of a product that does not provide a real clinical benefit for patients is quite expensive.”

He adds that Diurnal will be seeking an optimal price that is “fair and reasonable”. Compounded hydrocortisone can cost over $2,500 per year per patient.

Mr Whitaker states that hard efficacy data will ultimately drive pricing. “If you prove, using health economic evidence, that there is a benefit to the healthcare system, to patients and to society in terms of the cost there is every chance you will achieve a good reimbursement price.”

With this in mind Diurnal has already initiated a number of registration trials to demonstrate the long-term benefits of its products.

Building for the future

Plans are also under way in the US. A registration trial to extend the label to children under 16 is to start at the end of this year and read out at the end of 2017, with the hope of US approval by the end of 2018.

This could coincide with Diurnal’s other project, Chronocort, getting approval in Europe. Chronocort has been developed as a modified-release product for adults with AI due to congenital adrenal hyperplasia, and mimics the body’s natural release of cortisol. It has EU and US orphan designation; an EU study is ongoing, while US phase III trials are to start late this year or early in 2017.

With Infacort's approval process well under way and Chronocort advancing in Europe the group’s ambitions to establish an adrenal franchise are looking more realistic. Beyond AI, Diurnal is looking at treatments for hypothyroidism and hypogonadism.

The £30m ($44m) raised at IPO should be enough to complete the three outstanding relatively small studies and “progress commercialization in Europe”. But if Diurnal wants to move forward with its US ambitions more quickly, faithful shareholders could see a significant raise in 18-24 months.