TIDMDNL
RNS Number : 9586P
Diurnal Group PLC
23 February 2021
23 February 2021
Diurnal Group plc
("Diurnal" or the "Company")
Interim Results for the Six Months Ended 31 December 2020
Alkindi(R) sales grow while new deals enable further geographic
expansion; EMA approval of second drug, Chronocort(R) (,) expected
in Q1 2021
Diurnal Group plc (AIM: DNL), the specialty pharmaceutical
company targeting patient needs in chronic endocrine (hormonal)
diseases, announces its results for the six months ended 31
December 2020 (the "Period") and follows publication of a trading
update on 14 January 2021 .
Operational highlights
-- Alkindi(R) (hydrocortisone granules in capsules for opening)
o Alkindi(R) Sprinkle approved in the US with subsequent launch
by partner Eton Pharmaceuticals ("Eton") in late 2020
o Further Alkindi(R) approvals in Australia and Israel
-- Chronocort(R) (modified-release hydrocortisone)
o Chronocort(R) Day 120 responses submitted on time to the
European Medicines Agency (EMA); remains on track for anticipated
Committee for Medicinal Products for Human Use (CHMP)
recommendation in Q1 2021
o Continued progress in both Europe and US post-period end:
-- Received and replied to Chronocort(R) Day 180 questions from
EMA
-- Chronocort(R) marketing authorisation application (MAA)
submitted to the UK Medicines and Healthcare products Regulatory
Agency (MHRA) in parallel with EMA review
-- Commencement of market access activities for Chronocort(R) in
its target European markets, with the first commercial launch
scheduled for Q3 2021
-- Positive Type A meeting with US Food and Drug Administration
(FDA) to agree Chronocort(R) US development programme
-- DITEST(TM) (native oral testosterone formulation)
o Positive meeting with the US FDA confirming abbreviated
505(b)(2) development pathway, with potential to be the first
effective oral native testosterone treatment in an estimated $4.8bn
global market
-- Continued expansion of global footprint post-period end:
o Extension of Eton US licensing arrangement for Alkindi(R)
Sprinkle to add Canada
o Distribution agreement with Er-Kim for Alkindi(R) and
Chronocort(R) in Turkey
o Licensing agreement with Citrine Medicine for Alkindi(R) in
China; $0.5m non-refundable cash payment received and up to $12.75m
additional cash payments upon achieving certain regulatory and
sales milestones
o Distribution agreement with Consilient Health in the Nordics
for Chronocort(R)
Financial highlights
-- As previously announced, Alkindi(R) product sales for the six
months ended 31 December 2020 increased to GBP1,191k, representing
year-on-year growth of 4% (six months ended 31 December 2019:
GBP1,147k; year ended 30 June 2020: GBP2,390k) and total revenue
for the six months ended 31 December 2020, including licensing
income, was GBP1,214k, representing year-on-year growth of 6% (six
months ended 31 December 2019: GBP1,147k; year ended 30 June 2020:
GBP6,313k)
o The roll-out of Alkindi(R) in all markets was significantly
impacted by Covid-19 restrictions and patients' ability to visit
hospitals and, consequently, physicians' ability to switch these
patients to Alkindi(R) . Despite these restrictions, Alkindi(R)
revenues grew by over 20% in the UK and Germany
-- Operating loss for the six months ended 31 December 2020 of
GBP5,262k, increased 15% year-on-year (six months ended 31 December
2019: GBP4,575k), reflecting increased investment in the product
pipeline and preparations for anticipated Chronocort(R) European
launch
-- Cash and cash equivalents at 31 December 2020: GBP20,344k
(year ended 30 June 2020: GBP15,434k)
o Placing and Open Offer completed in October 2020 raising
GBP9.8m before expenses, primarily to fund development of
DITEST(TM) and other pipeline opportunities
Martin Whitaker, PhD, Chief Executive Officer of Diurnal,
commented:
"Diurnal has continued to make excellent progress during the
Period in making Alkindi(R) available to patients around the world.
Notably, Alkindi(R) Sprinkle received regulatory approval in the US
and was subsequently launched there by our partner, Eton. W e are
pleased with the growth in Alkindi(R) revenues, despite previously
highlighted pandemic-related restrictions in Europe, and look
forward to this growth accelerating, especially when pandemic
restrictions begin to lift."
"Looking forward, our commercial focus is now on preparation for
the anticipated approval and initial launches of Chronocort(R) in
congenital adrenal hyperplasia during 2021, to significantly expand
our European cortisol deficiency franchise, towards profitability.
Separately, we continue to make good progress in development
activities with Chronocort(R) in the US and Japan, as well as
potential indication expansion into adrenal insufficiency. In
addition, we are preparing for the next phase of development of
DITEST(TM) in the US as an innovative, testosterone-based,
potential treatment for hypogonadism and this is a major commercial
opportunity within our pipeline of products."
In the Interim Results:
-- "bn", "m" and "k" represent billion, million and thousand, respectively
-- "Group" is the Company and its subsidiary undertakings,
Diurnal Limited and Diurnal Europe B.V.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014 (MAR).
For further information, please visit www.diurnal.co.uk or
contact:
+44 (0)20 3727
Diurnal Group plc 1000
Martin Whitaker, Chief Executive Officer
Richard Bungay, Chief Financial Officer
Panmure Gordon (UK) Limited (Nominated Adviser +44 (0)20 7886
and Sole Broker) 2500
Corporate Finance: Freddy Crossley, Emma Earl
Corporate Broking: Rupert Dearden
+44 (0)20 3727
FTI Consulting (Media and Investor Relations) 1000
Simon Conway
Victoria Foster Mitchell
Notes to Editors
About Diurnal Group plc
Founded in 2004, Diurnal is a UK-headquartered, European
specialty pharma company developing hormone therapeutics for the
global market for the life-long treatment of chronic endocrine
conditions, including congenital adrenal hyperplasia, adrenal
insufficiency and hypogonadism. Its expertise and innovative
research activities focus on circadian-based endocrinology to yield
novel product candidates in the rare and chronic endocrine disease
arena.
For further information about Diurnal, please visit
www.diurnal.co.uk
Forward looking statements
Certain information contained in this announcement, including
any information as to the Group's strategy, plans or future
financial or operating performance, constitutes "forward-looking
statements". These forward-looking statements may be identified by
the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "projects", "expects",
"intends", "aims", "plans", "predicts", "may", "will", "seeks"
"could" "targets" "assumes" "positioned" or "should" or, in each
case, their negative or other variations or comparable terminology,
or by discussions of strategy, plans, objectives, goals, future
events or intentions. These forward-looking statements include all
matters that are not historical facts. They appear in a number of
places throughout this announcement and include statements
regarding the intentions, beliefs or current expectations of the
Directors concerning, among other things, the Group's results of
operations, financial condition, prospects, growth, strategies and
the industries in which the Group operates. The directors of the
Company believe that the expectations reflected in these statements
are reasonable but may be affected by a number of variables which
could cause actual results or trends to differ materially. Each
forward-looking statement speaks only as of the date of the
particular statement.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future or are beyond
the Group's control. Forward-looking statements are not guarantees
of future performance. Even if the Group's actual results of
operations, financial condition and the development of the
industries in which the Group operates are consistent with the
forward-looking statements contained in this document, those
results or developments may not be indicative of results or
developments in subsequent periods.
Chief Executive Review
During the Period, Diurnal has continued to make strong progress
towards its vision of becoming a world-leading endocrinology
specialty pharma company, despite the challenging backdrop posed by
Covid-19 restrictions.
Underpinning this vision is the development of a strong
commercial business in Europe, initially focused on delivery of the
Group's two lead products, Alkindi(R) and Chronocort(R) , for
patients suffering from the orphan diseases adrenal insufficiency
(AI) and congenital adrenal hyperplasia (CAH), a combined potential
market of $2.1bn. The Group is also seeking to maximise the value
of its products in the rest of the world, with particular reference
to the large opportunities for CAH and AI in the US (c. $1.1bn) and
Japan (c. $0.4bn).
The Group is also building a pipeline of valuable opportunities,
with the successful completion of a GBP9.8m fundraising during the
Period enabling it to progress clinical development of DITEST(TM),
its native oral testosterone replacement product for the treatment
of hypogonadism, a potential global market of approximately
$4.8bn.
Alkindi(R) : establishing a global product presence
Alkindi(R) is the first product specifically designed for young
children suffering from paediatric AI, and the related condition
CAH. Alkindi(R) is licensed in Europe and has been proven to be
effective in a formulation specifically designed for children.
Diurnal's commercialisation efforts for Alkindi(R) are focused on
the larger European markets, and initially on patients aged 0-6
years where the unmet need is highest. Diurnal's long-term strategy
is underpinned by its commercialisation infrastructure in key
European markets. Diurnal has built one of the few dedicated
endocrinology-focused commercial teams in Europe, focused on
building awareness of its products within the concentrated
prescribing community of endocrinologists, initially with
Alkindi(R) following its regulatory approval in 2018. Outside of
these core markets, Diurnal is pursuing distribution or licensing
deals to make its products, once approved, available to as broad a
range of patients as possible.
In Europe, Alkindi(R) has now been launched by Diurnal in the
UK, Germany, Italy and Austria, and by its partner FrostPharma in
Sweden, Denmark, Norway and Iceland. During the Period, the Group
saw continued growth of Alkindi(R) sales in the UK and Germany,
despite the impact of the Covid-19 pandemic on patients' ability to
visit hospitals and, consequently, physicians' ability to switch
these patients to Alkindi(R) . Growth from new territories where
Alkindi(R) was launched during the Period was modest, reflecting
the limitation of impactful in-country launches due to the Covid-19
pandemic. The Financial Review provides further detail on the
development of Alkindi(R) revenues.
During the Period, Diurnal further extended the reach of
Alkindi(R) through execution of distribution deals with Consilient
Health, covering the Benelux countries, and with EffRx in
Switzerland. Pricing for Alkindi(R) has been approved in the
Netherlands and the launch planning is underway by Consilient
Health whilst EffRx submitted a marketing authorisation application
(MAA) to SwissMedic during the Period, with approval anticipated
during 2021.
Diurnal, and its distribution and licensing partners, achieved
three regulatory approvals during the Period for Alkindi(R) . In
the US, where the product is called Alkindi(R) Sprinkle, approval
from the US Food and Drug Administration (FDA) was received at the
end of September 2020 for children aged under 17 years of age. In
November, less than two months after approval, Diurnal's partner,
Eton Pharmaceuticals ("Eton"), announced the launch of the product.
Diurnal and Eton are awaiting confirmation of Orphan Drug Status
from the FDA, which will trigger a $2.5m milestone payment to
Diurnal. During the Period, Diurnal also announced that its
Australian partner, Emerge Health, had received approval for
Alkindi(R) , with no age restriction, and its partner in Israel,
Medison Pharma, had received approval for Alkindi(R) in children
under 18 years of age. Launches in these territories are expected
following completion of pricing and reimbursement activities.
The Company further expanded the global reach for Alkindi(R)
after the end of the Period, with an extension of its licensing
deal with Eton to cover Canada, a licensing deal with Er-Kim in
Turkey to supply Alkindi(R) on a named patient basis, and a
licensing deal with Citrine Medicine in China for Alkindi(R) .
Diurnal continues to assess the opportunity for Alkindi(R) in
Japan and, during the Period, the Company formulated a development
and regulatory strategy for this market. Consistent with this
strategy, a submission for regulatory protection was submitted to
the Japanese Ministry of Health, Labour and Welfare (MHLW) shortly
after the end of the Period.
Chronocort(R) : expanding the cortisol deficiency franchise
Diurnal's second product candidate, Chronocort(R) , provides a
drug release profile that is designed to improve disease treatment
for adults with CAH, as measured by androgen (male sex hormone)
control.
Diurnal submitted an MAA to the EMA for Chronocort(R) as a
treatment for adult and adolescent patients with CAH in December
2019. This followed completion of a Phase 3 study conducted in a
total of 122 patients enrolled across 11 clinical sites, the
largest ever interventional clinical trial completed in CAH, and a
subsequent positive meeting with the EMA providing written formal
Scientific Advice confirming the clinical and regulatory pathway
for Chronocort(R) . The Phase 3 data was supported by detailed
analysis of data from an open-label safety extension study for
patients completing treatment in the Phase 3 study, which is
assessing the impact of treatment with Chronocort(R) over an
extended period, regardless of whether the patients were initially
treated with Chronocort(R) or standard-of-care. A significant
proportion of patients eligible to enter the follow-on study did
so, and patient retention rates in this study have been high, with
a number of patients on this trial having been treated for over 54
months. Patients on this trial have, to date, shown sustained
benefit from extended Chronocort(R) treatment.
Shortly after the end of the Period, Diurnal received the second
formal set of questions from the EMA ("Day 180 questions") and has
responded to these in line with the EMA's timetable. Assuming
responses to these (and any subsequent) questions are acceptable to
the EMA, Diurnal anticipates receiving recommendation for approval
of Chronocort(R) in Europe in March 2021, with formal approval from
the European Commission to follow in Q2 2021. In parallel with the
MAA submission, Diurnal will apply for confirmation of Orphan Drug
Status for Chronocort(R) in CAH.
Reflecting the UK Medicines and Healthcare products Regulatory
Agency's (MHRA) guidance following the end of the Brexit Transition
Period, an 'in flight' MAA has been submitted to the MHRA seeking
approval for Chronocort(R) in Great Britain based on the same
application submitted to the EMA. Approval from the MHRA is also
expected during Q1 2021. In parallel with the MHRA submission,
Diurnal will seek confirmation of British Orphan Drug Status for
Chronocort(R) in CAH, which requires the Company to demonstrate
significant clinical benefit for the product compared to existing
therapies.
Following the end of the Period, Diurnal announced the
publication of the peer-reviewed results of the Phase 3 clinical
trial and extension study for Chronocort(R) in the Journal of
Clinical Endocrinology and Metabolism ("JCEM"). The Phase 3 study
results published by the JCEM found that although the
standard-deviation-score-focused primary endpoint of the study was
missed, Chronocort(R) improved morning and early afternoon
biochemical control for adults with CAH over standard
glucocorticoid therapy. In the safety extension study, biochemical
control was sustained for 18 months on median hydrocortisone doses
in the range recommended for cortisol replacement therapy and lower
than glucocorticoid doses normally used in the treatment of
CAH.
To facilitate a timely commercial launch assuming approval by
the EMA and MHRA, Diurnal has commenced market access activities
for Chronocort(R) in its target European markets, with the first
commercial launch scheduled for Q3 2021. Assuming approval of
Chronocort(R) in Europe as expected, the Company intends to mirror
its strategy for Alkindi(R) by commercialising the product itself
in core European markets. The Company is manufacturing launch
stocks for Chronocort(R) during the first half of 2021, utilising
many aspects of the supply chain that has already been established
for Alkindi(R) . In addition, the Company is undertaking several
initiatives to enhance capacity and reduce cost of goods of
Chronocort(R) in the mid-term.
Outside of its core European markets, Diurnal intends to make
Chronocort(R) available commercially through distribution or
licensing deals with local partners who can quickly gain market
access. Diurnal expanded its global reach during the Period through
entering into distribution deals with Consilient Health for the
Benelux countries and with Er-Kim to supply Alkindi(R) on a named
patient basis in Turkey, adding to the Group's existing
Chronocort(R) distribution agreements with Emerge Health in
Australia and Medison Pharma in Israel. Following the end of the
Period, Diurnal extended its partnership with Consilient Health to
include commercialisation of Chronocort(R) in the Nordic
region.
Outside Europe, Diurnal continues to progress plans for
development of Chronocort(R) in major markets. In the US, the FDA
has previously indicated that the registration package for CAH
requires an additional study to the European Phase 3 CAH study.
Diurnal is seeking formal agreement of the US Phase 3 protocol with
the FDA through a Special Protocol Assessment (SPA). Following a
positive Type A meeting with the FDA, as part of the SPA process,
after the end of the Period, the US Phase 3 protocol has now been
finalised and Diurnal will seek confirmation of the SPA from the
FDA during H1 2021. In parallel with the regulatory discussions,
the Company is assessing the opportunity to fund the US Phase 3
development itself in order to increase the future value of the
programme, as well as significantly broadening the pool of
potential commercialisation partners.
Diurnal has also been working with a global Clinical Research
Organisation (CRO) to determine the optimum registration route for
Chronocort(R) in Japan, including the potential to include a cohort
of Japanese patients in a US Phase 3 clinical study. Diurnal
intends to seek Orphan Drug Designation for Chronocort(R) in Japan
once the development path has been determined.
In addition to expanding the global availability of
Chronocort(R) to CAH patients, Diurnal is also seeking to expand
its utility into the related condition, AI, a market opportunity of
approximately $2.8bn across Europe and the US. Part of the
fundraising completed in October 2020 will enable Diurnal to
commence a study of Chronocort(R) compared to the approved product
Plenadren(R) in Europe, which Diurnal believes, along with the
Phase 3 CAH study, will facilitate submission of a line extension
to AI in Europe, and will also provide valuable insights into
potential future development of Chronocort(R) in AI in the US.
DITEST(TM): expanding the innovative product pipeline
Diurnal's third novel product, DITEST(TM), is a native oral
testosterone therapy for the treatment of male hypogonadism. The
estimated $4.8bn market in US and Europe for testosterone-based
products for the treatment of hypogonadism is dominated by
topically-available products, which have compliance and safety
issues, while key issues with the use of alternative, oral modified
testosterone products (testosterone undecanoate) have been the
variability in absorption and the requirement for a high-fat meal
to achieve therapeutic testosterone levels.
A Phase 1 study evaluating the pharmacokinetics, safety and
tolerability of DITEST(TM) in adult men with primary or secondary
hypogonadism demonstrated the achievement of testosterone levels
within the healthy young male adult normal range after oral
administration, with levels that were less variable than the
comparator, testosterone undecanoate. Secondary endpoints
demonstrated that there was no impact on the rate and extent of
absorption of testosterone from DITEST(TM) whether taken with
either food or in the fasted state, representing a major difference
with testosterone undecanoate. The study also demonstrated that
there were no serious adverse events in the DITEST(TM) arm of the
study, and levels of the potent testosterone derived androgen,
dihydrotestosterone (DHT), were lower than with testosterone
undecanoate.
Following these positive results, the Group met with the FDA
during the Period, who confirmed that DITEST(TM) can progress to a
New Drug Application (NDA) via the abbreviated 505(b)(2) route,
which relies, in part, on published literature and other
non-Company studies to support a marketing application and can
significantly accelerate the time to approval, compared to
FDA-designated New Chemical Entities. Diurnal is currently
completing non-clinical activities requested by the FDA in order to
submit an Investigational New Drug (IND) submission around the
middle of 2021, with a view to commencing a multiple ascending dose
study in male patients with low testosterone shortly thereafter.
Assuming this study is successful, the FDA indicated that a single
Phase 3 study should be sufficient to obtain approval for
DITEST(TM) in the US.
Outlook
If approved by the EMA, Chronocort(R) will provide the Company's
commercial cortisol replacement therapy franchise with critical
mass, enabling Diurnal to build a strong and profitable European
business through penetration of the combined addressable market for
the treatment of CAH and paediatric AI, which is estimated by the
Company to be worth c.$300 million in Europe alone. In addition,
the Group expects an increased contribution from its licensing and
distribution partners outside of Europe once regulatory and/or
pricing and reimbursement activities for Alkindi(R) are completed
in these territories.
In the US, Diurnal continues to assess the optimal timing for
seeking a partner for the commercialisation of Chronocort, which
may be following the completion of Phase 3 development itself: if
successful, this would be expected to markedly increase the value
of the asset.
DITEST(TM) represents a further valuable addition to Diurnal's
growing pipeline of novel endocrinology treatments and, following
the fundraising in October 2020, the Company will move forward with
the next stage of development in order to maximise the value of
this product in the $4.8bn potential market in the US and
Europe.
Financial Review
Revenues and gross margin
Alkindi(R) product sales for the Period were GBP1,191k,
representing year-on-year growth of 4% (six months ended 31
December 2019: GBP1,147k). Total revenue for the six months ended
31 December 2020, including licensing income, was GBP1,214k,
representing year-on-year growth of 6% (six months ended 31
December 2019: GBP1,147k).
The roll-out of Alkindi(R) during the Period was significantly
impacted by Covid-19 restrictions, with sales in all markets below
the Company's expectations. The UK and Germany demonstrated
continued growth, with sales increasing by over 20% despite the
impact of the Covid-19 pandemic on patients' ability to visit
hospitals and, consequently, physicians' ability to switch these
patients to Alkindi(R) . The revenue contribution from Italy was
modest, reflecting the curtailment of an impactful launch due to
the pandemic. Overall sales growth in Diurnal's core commercial
markets was offset by timing of bulk sales to Nordic partner, Frost
Pharma, with sales into the Nordic region for the Period GBP207k
lower than the prior period. Growth of Alkindi(R) product revenues
is expected to accelerate once Covid-19 pandemic restrictions begin
to lift.
Cost of goods relates entirely to product sales of Alkindi(R) .
Gross margin for Alkindi(R) product sales during the Period was 71%
(six months ended 31 December 2019: 74%). Cost of goods and
revenues includes sale of initial Alkindi(R) Sprinkle launch stocks
to Eton, which are supplied at cost under the terms of the
exclusive licensing agreement announced in March 2020. Excluding
these sales to Eton from revenues and cost of goods, gross margin
for the Period was 76%. The overall gross margin is determined by
the mix of sales by country, particularly in regions where Diurnal
divides revenue with its distribution partners, and by dose
strength. Underlying gross margins are beginning to benefit from
margin improvements through growth in production volumes and other
manufacturing efficiencies: Diurnal has implemented several
initiatives with its manufacturing partners to further reduce cost
of goods in the medium-term.
Operating expenses
Research and development (R&D) expenditure for the Period
was GBP2,633k (six months ended 31 December 2019: GBP2,388k).
During the Period, R&D activities increased as a result of
several new activities, including initial manufacturing scale-up
activities for Chronocort(R) , which are expensed to the
consolidated income statement, DITEST(TM) non-clinical activities
in support of the planned Investigational New Drug (IND) submission
to the US Food and Drug Administration (FDA) during 2021, and
activities in support of planning the development and regulatory
pathway for Alkindi(R) and Chronocort(R) in Japan. As highlighted
during the fundraising completed in October 2020, R&D
expenditure is expected to further increase in the second half of
the financial year as preparations commence in support of the
planned DITEST(TM) multiple ascending dose study, the proposed
study with Chronocort(R) versus Plenadren(R) in adrenal
insufficiency, and acceleration of Alkindi(R) development
activities in Japan.
Selling and distribution expenses for the Period increased to
GBP2,457k (six months ended 31 December 2019: GBP1,977k) as the
Company prepares for the anticipated first commercial launches of
Chronocort(R) during 2021. In particular, the Company has initiated
health economic modelling and pricing work to support pricing and
reimbursement applications across Europe which are expected to be
submitted following the anticipated approval of Chronocort(R) in
the European Economic Area (EEA) by the EMA and in Great Britain by
the MHRA during the current financial year.
Administrative expenses for the Period were GBP1,629k (six
months ended 31 December 2019: GBP1,054k). The expenses for the
prior period were reported net of a foreign exchange gain of
GBP362k arising from the settlement of US dollar commitments
relating to the closedown of the Chronocort(R) US clinical studies;
excluding this gain, the underlying administrative expenses would
have been GBP1,416k. Costs for the current Period include an
increase in the provision for National Insurance payments on
unexercised share options of GBP105k, arising from the increase in
share price during the Period, compared to a decrease in this
provision in the prior period of GBP73k. In addition, in line with
many other companies Diurnal has experienced increased costs for
audit fees and corporate insurances during the Period, reflecting a
broader economic backdrop of increased risk arising from recent
corporate failures and also Covid-19 impacts.
Operating loss
Operating loss for the Period increased to GBP5,262k (six months
ended 31 December 2019: GBP4,575k), reflecting the impact of
increased operating expenses outlined above. Operating loss for the
Period includes an unrealised gain for the Period of GBP590k
relating to the shares held in Eton that were received as part of
the upfront consideration for the exclusive licence agreement of
Alkindi(R) Sprinkle in the US, which is shown under 'Other gains -
net' in the consolidated income statement.
Financial income and expense
Financial income in the Period was GBP56k (six months ended 31
December 2019: GBP34k), reflecting the higher average cash balances
held by the Group during the Period.
Loss on ordinary activities before tax
Loss before tax for the Period was GBP5,206k (six months ended
31 December 2019: GBP4,544k).
Tax
During the Period the Company finalised and submitted its
R&D tax credit claim in respect of the year ended 30 June 2020;
this final amount of GBP1,199k was received before the end of the
Period.
The current year includes an estimate of the R&D tax credit
attributable to the Period, shown as an amount receivable in the
consolidated balance sheet of GBP542k as at 31 December 2020.
The Group has not recognised any deferred tax assets in respect
of trading losses arising in the Period.
Earnings per share
Loss per share decreased to 3.7 pence (six months ended 31
December 2019: 4.7 pence), with the increase in loss for the Period
more than offset by the increase in weighted average number of
shares outstanding in the Period following the fundraisings in
March 2020 and October 2020.
Cash flow
Net cash used in operating activities during the Period was
GBP4,169k (six months ended 31 December 2019: GBP4,957k), with the
increased operating loss during the Period and increase in
Alkindi(R) inventory at the end of the Period being more than
offset by an increase in accrued expenses and earlier receipt of
the R&D tax credit repayment compared to the prior period.
Net cash from financing activities during the Period of
GBP9,136k represents the net proceeds of the placing completed in
October 2020 of GBP9,116k along with proceeds of exercise of share
options of GBP20k.
Balance sheet
Total assets increased to GBP26,364k (30 June 2020: GBP18,385k),
primarily reflecting the fundraising in October 2020, offset by
operating outflows.
Inventories at 31 December 2020 increased to GBP1,666k (30 June
2020: GBP1,241k), reflecting an increase in Alkindi(R) stocks both
as a result of planned stockpiling to support recent market
launches as well as a temporary increase in finished goods arising
from lower than anticipated Alkindi(R) product sales. Inventories
also reflect increased holdings of bulk hydrocortisone, following a
strategic decision to increase raw material holdings. Levels of
Alkindi(R) stocks are expected to reduce over the next 12 months as
market requirements become more predictable; however, in advance of
the anticipated launch of Chronocort(R) the Company expects to
begin building launch stocks during the remainder of the financial
year which is likely to lead to a further increase in inventories
at the financial year end.
Investments held at fair value through profit and loss of
GBP2,258k (30 June 2020: GBP1,668k) solely relate to the shares
held in Eton noted above. The value of the Eton shareholding had
increased by GBP1,217k from receipt of the shares to 31 December
2020.
Cash and cash equivalents at 31 December 2020 were GBP20,344k
(30 June 2020: GBP15,434k).
Total liabilities increased to GBP3,225k (30 June 2020:
GBP2,591k), reflecting an increased level of trade payables
compared to the prior period.
Net assets were GBP23,139k (30 June 2020: GBP18,385k).
Financial outlook
Following the fundraising in March 2020 and October 2020,
Diurnal expects its cash resources to take its core commercial
European cortisol deficiency franchise through to profitability
based upon current plans and assumptions, including expectations
regarding the timing of product approvals and sales projections.
The Company intends to 'ringfence' this franchise and to seek
incremental funding and/or partnering arrangements for discrete,
future development opportunities. To this end, the fundraising that
was completed in October 2020 will finance the next stage of
development of DITEST(TM) in the US, the expansion of Chronocort(R)
into adrenal insufficiency in Europe, and the development of
Alkindi(R) in Japan. Pursuit of additional opportunities, including
the potential for investment in DITEST(TM) Phase 3 clinical
development and/or Chronocort(R) US registration studies, will be
subject to additional financing being available to the Company,
though additional equity investment, non-dilutive financing and/or
partnering arrangements.
Principal risks and uncertainties
Diurnal considers strategic, operational and financial risks and
identifies actions to mitigate these risks. The principal risks and
uncertainties are set out in the Group's Annual Report and Accounts
for the year ended 30 June 2020, available on the website
www.diurnal.co.uk . There are no changes to these principal risks
since the issue of the Annual Report and Accounts.
Consolidated income statement
for the six months ended 31 December 2020
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2020 2019 2020
Note GBP000 GBP000 GBP000
Revenue 5 1,214 1,147 6,313
Cost of sales (347) (303) (668)
---------- ---------- ----------
Gross profit 867 844 5,645
Research and development
expenditure (2,633) (2,388) (4,625)
Selling and distribution
expenses (2,457) (1,977) (4,135)
Administrative expenses (1,629) (1,054) (2,904)
Other gains - net 590 - 627
---------- ---------- ----------
Operating loss (5,262) (4,575) (5,392)
Net financial income 56 31 114
Loss before tax (5,206) (4,544) (5,278)
Taxation 7 545 509 1,206
Loss for the period (4,661) (4,035) (4,072)
---------- ---------- ----------
Basic and diluted loss per
share (pence per share) 6 (3.7) (4.7) (4.3)
---------- ---------- ----------
All activities relate to continuing operations.
The Notes form part of this condensed financial information.
Consolidated statement of comprehensive income
for the six months ended 31 December 2020
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2020 2019 2020
GBP000 GBP000 GBP000
Loss for the period and
total comprehensive loss
for the period (4,661) (4,035) (4,072)
---------- ---------- ----------
The Notes form part of this condensed financial information.
Consolidated balance sheet
as at 31 December 2020
Unaudited Audited Unaudited
As at As at As at
31 Dec 30 Jun 31 Dec
2020 2020 2019
Note GBP000 GBP000 GBP000
Non-current assets
Intangible assets 79 79 61
Property, plant and equipment 8 97 23 83
Investments held at fair
value through profit and
loss 9 2,258 1,668 -
---------- --------- ----------
2,434 1,770 144
---------- --------- ----------
Current assets
Inventories 10 1,666 1,241 764
Research and development
tax credit claims receivable 542 1,194 2,614
Trade and other receivables 11 1,378 1,337 1,410
Cash and cash equivalents 20,344 15,434 4,625
23,930 19,206 9,413
---------- --------- ----------
Total assets 26,364 20,976 9,557
---------- --------- ----------
Current liabilities
Trade and other payables 12 (3,210) (2,555) (2,109)
(3,210) (2,555) (2,109)
---------- --------- ----------
Non-current liabilities
Trade and other payables 12 (15) (36) (15)
(15) (36) (15)
---------- --------- ----------
Total liabilities (3,225) (2,591) (2,124)
---------- --------- ----------
Net assets 23,139 18,385 7,433
---------- --------- ----------
Equity
Share capital 6,917 6,082 4,327
Share premium 59,268 50,967 42,149
Group reconstruction reserve (2,943) (2,943) (2,943)
Accumulated losses (40,103) (35,721) (36,100)
Total equity 23,139 18,385 7,433
---------- --------- ----------
The Notes form part of this condensed financial information.
Consolidated statement of changes in equity
for the six months ended 31 December 2020
Unaudited Unaudited Unaudited Unaudited Unaudited
Share Share Group reconstruction Accumulated
capital premium reserve losses Total
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 30 June
2019 4,226 42,153 (2,943) (32,492) 10,944
Loss for the period
and total comprehensive
loss for the period - - - (4,035) (4,035)
---------- ---------- --------------------- ------------ ----------
Equity settled share-based
payment transactions - - - 427 427
Issue of shares for
cash 101 3 - - 104
Costs charged against
share premium - (7) - - (7)
Total transactions
with owners recorded
directly in equity 101 (4) - 427 524
Balance at 31 December
2019 4,327 42,149 (2,943) (36,100) 7,433
Loss for the period
and total comprehensive
loss for the period - - - (37) (37)
---------- ---------- --------------------- ------------ ----------
Equity settled share-based
payment transactions - - - 416 416
Issue of shares for
cash 1,755 9,421 - - 11,176
Costs charged against
share premium - (603) - - (603)
Total transactions
with owners recorded
directly in equity 1,755 8,818 - 416 10,989
Balance at 30 June
2020 6,082 50,967 (2,943) (35,721) 18,385
Loss for the period
and total comprehensive
loss for the period - - - (4,661) (4,661)
---------- ---------- --------------------- ------------ ----------
Equity settled share-based
payment transactions - - - 279 279
Issue of shares for
cash 835 8,970 - - 9,805
Costs charged against
share premium - (669) - - (669)
---------- ---------- --------------------- ------------ ----------
Total transactions
with owners recorded
directly in equity 835 8,301 - 279 9,415
Balance at 31 December
2020 6,917 59,268 (2,943) (40,103) 23,139
---------- ---------- --------------------- ------------ ----------
Loss for the period is the only constituent of total
comprehensive loss for each period so the period amounts are shown
in the same line in the consolidated statement of changes in
equity.
Consolidated statement of cash flows
for the six months ended 31 December 2020
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2020 2019 2020
GBP000 GBP000 GBP000
Cash flows from operating activities
Loss for the period (4,661) (4,035) (4,072)
Adjustments for:
Licensing income received as
non-cash consideration - - (1,041)
Fair value adjustment to investments (590) - (627)
Depreciation, amortisation and
impairment 12 39 25
Share-based payment 279 427 843
Net foreign exchange loss/(gain) 26 (352) (357)
Finance income (56) (34) (114)
Finance expenses - 3 -
Taxation (545) (509) (1,206)
(Increase) in inventories (425) (92) (569)
(Increase)/decrease in trade
and other receivables (41) 47 119
Increase/(decrease) in trade
and other payables 634 (451) 70
Cash used in operations (5,367) (4,957) (6,929)
Net tax received 1,198 - 2,120
Net cash used in operating activities (4,169) (4,957) (4,809)
---------- ---------- ----------
Cash flows from investing activities
Additions of property, plant
and equipment (81) (3) (7)
Capitalisation of research and
development expenditure (6) (16) (38)
Interest received 56 34 114
Net cash from investing activities (31) 15 69
---------- ---------- ----------
Cash flows from financing activities
Net proceeds from issue of share
capital 9,136 97 10,670
Repayment of lease liabilities - (29) -
---------- ---------- ----------
Net cash from financing activities 9,136 68 10,670
---------- ---------- ----------
Net (decrease)/increase in cash
and cash equivalents 4,936 (4,874) 5,930
Cash and cash equivalents at
the start of the period 15,434 9,147 9,147
Effects of exchange rate changes
on cash and cash equivalents (26) 352 357
Cash and cash equivalents at
the end of the period 20,344 4,625 15,434
---------- ---------- ----------
Notes to the consolidated financial statements
1 General information
Diurnal Group plc ('the Company') and its subsidiaries (together
'the Group') are a commercial stage specialty pharmaceutical
business targeting patient needs in chronic endocrine (hormonal)
diseases which the Group believes are currently not met
satisfactorily by existing treatments. It has identified a number
of specialist endocrinology market opportunities in Europe, the US
and worldwide that are together estimated to be substantial
commercial opportunities.
The Company is a public limited company incorporated and
domiciled in the United Kingdom. Its registered number is 09846650.
The address of its registered office is Cardiff Medicentre, Heath
Park, Cardiff, CF14 4UJ and its primary and sole listing is on the
Alternative Investments Market (AIM) of the London Stock
Exchange.
2 Basis of preparation
As permitted these unaudited consolidated interim financial
statements have been prepared and approved by the Directors in
accordance with UK AIM rules and the IAS 34 'Interim financial
reporting' as adopted by the European Union. They should be read in
conjunction with audited consolidated financial statements for the
year ended 30 June 2020, which were prepared in accordance with
IFRS as adopted by the European Union.
The financial information contained in these interim financial
statements has been prepared under the historical cost convention,
and on a going concern basis. The interim financial information for
the six months ended 31 December 2020 and for the six months ended
31 December 2019 contained within this interim report do not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006. The figures for the year ended 30 June 2020
have been extracted from the audited statutory accounts which were
approved by the Board of Directors on 14 September 2020 and
delivered to the Registrar of Companies. The report of the auditors
on those accounts was unqualified and did not contain statements
under 498 (2) or (3) of the Companies Act 2006.
3 Going concern
For the Period ended 31 December 2020, the Group made an
operating loss of GBP5,262k on revenue of GBP1,214k and used net
cash in operating activities of GBP4,169k. Cash and cash
equivalents at 31 December 2020 were GBP20,344k.
The Board has considered the applicability of the going concern
basis in the preparation of the financial statements. Based on the
Directors' current forecasts and plans (including modelling of a
number of scenarios reflecting potential outcomes of the ongoing
impact of Covid-19 on product sales and the Group's ongoing
regulatory review for Chronocort(R) ), and considering the cash and
cash equivalents at 31 December 2020 of GBP20,344k (which reflects
the GBP9.1m net fundraising completed in October 2020), the Group
has sufficient funding for the foreseeable future and at least 12
months from the date of approval of this report. For this reason,
the Directors continue to adopt the going concern basis in
preparing the financial statements. The financial statements do not
include any adjustments that would result from the basis of
preparation being inappropriate.
4 A ccounting policies
These consolidated interim financial statements for the six
months ended 31 December 2020 include the results of Diurnal Group
plc and its wholly-owned subsidiaries, Diurnal Limited and Diurnal
Europe B.V. The unaudited results for the period have been prepared
on the basis of accounting policies adopted in the audited accounts
for the year ended 30 June 2020 and expected to be adopted in the
financial year ending 30 June 2021. Where new IFRS standards
amendments or interpretations became effective in the six months to
the 31 December 2020, there has been no material impact on the net
assets or results of the Group.
5 Segmental information
The Board regularly reviews the Group's performance and balance
sheet position for its operations and receives financial
information for the Group in order to assess performance and make
strategic decisions about the allocation of resources. The Group
considers its business to operate in a single segment, namely the
development and supply of novel therapeutic agents for the
treatment of chronic endocrine disorders.
Disaggregation of revenue
An analysis of revenue by type is set out in the table
below:
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec
2020 2019 30 Jun 2020
GBP000 GBP000 GBP000
Sales of goods 1,191 1,147 2,390
Licence fees 23 - 3,923
---------- ---------- ------------
1,214 1,147 6,313
---------- ---------- ------------
An analysis of revenue by the country of destination is set out
below:
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec
2020 2019 30 Jun 2020
GBP000 GBP000 GBP000
Europe 1,132 1,147 2,390
USA 82 - 3,923
---------- ---------- ------------
1,214 1,147 6,313
---------- ---------- ------------
The Group's customers are wholesalers, distributors and
licensing partners in the markets in which it has launched
Alkindi(R) . An analysis of revenue from the sale of goods by
customer is set out in the table below:
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec
2020 2019 30 Jun 2020
GBP000 GBP000 GBP000
Customer A 570 457 900
Customer B 188 395 725
Customer C 82 - -
Customer D 81 55 194
Customer E 76 - 32
Other customers 194 240 539
---------- ---------- ------------
1,191 1,147 2,390
---------- ---------- ------------
6 Loss per share
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2020 2019 2020
Loss for the period (GBP000) (4,661) (4,035) (4,072)
Weighted average number of shares
(000) 127,644 86,366 95,228
Basic and diluted loss per share
(pence per share) (3.7) (4.7) (4.3)
---------- ---------- ----------
The diluted loss per share is identical to the basic loss per
share in all periods, as potential dilutive shares are not treated
as dilutive since they would reduce the loss per share.
7 Taxation
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2020 2019 2020
GBP000 GBP000 GBP000
Current tax:
- UK corporation tax on losses - - -
of period
- Dutch corporation tax on subsidiary
profits for the period 2 - 2
- Research and development tax
credit receivable for the current
period (542) (495) (1,194)
- Prior period adjustment in respect
of research and development tax
credit (5) (14) (14)
Deferred tax:
- Origination and reversal of temporary - - -
differences
Tax on loss on ordinary activities (545) (509) (1,206)
---------- ---------- ----------
The Group is entitled to claim tax credits in the United Kingdom
under the UK research and development (R&D) small or
medium-sized enterprise (SME) scheme, which provides additional
taxation relief for qualifying expenditure on R&D activities
and includes an option to surrender a portion of tax losses arising
from qualifying activities in return for a cash payment from HM
Revenue & Customs (HMRC).
The Group's claim for R&D tax credits for the year ended 30
June 2020 was finalised at GBP1,199k, which was received from HMRC
during the Period.
8 Property, plant and equipment
Unaudited Audited Unaudited
31 Dec 30 Jun 31 Dec
2020 2020 2019
GBP000 GBP000 GBP000
Cost
Opening balance 84 77 77
Recognition of right of use assets - - 83
Additions 81 7 3
Disposals (1) - -
Closing balance 164 84 163
---------- -------- ----------
Depreciation
Opening balance 61 44 44
Charge for the period 7 17 36
Disposals (1) - -
---------- -------- ----------
Closing balance 67 61 80
---------- -------- ----------
Net book value
At start of period 23 33 33
---------- -------- ----------
At end of period 97 23 83
---------- -------- ----------
The prior period included recognition of right of use assets
reflecting the adoption by the Group of IFRS 16, which requires the
capitalisation of future operating lease payments. Upon a detailed
review of the requirements of IFRS 16 as at 30 June 2020, the Group
determined that all of its leasing arrangements were outside of the
capitalisation requirements of IFRS 16; consequently, all
associated entries (including the recognition of right of use
assets and associated depreciation) were reversed in the audited
results for the year ended 30 June 2020
9 Investments held at fair value through profit and loss
Unaudited Audited Unaudited
As at As at As at
31 Dec 30 Jun 31 Dec
2020 2020 2019
GBP000 GBP000 GBP000
Balance at the start of period 1,668 - -
Additions - 1,041 -
Fair value adjustment to investments 590 627 -
2,258 1,668 -
---------- -------- ----------
Additions to investments in the year ended 30 June 2020 solely
relate to the 379,474 shares held in Eton Pharmaceuticals that were
received as part of the upfront consideration for the exclusive
licence agreement of Alkindi(R) Sprinkle in the US. The shares in
Eton are treated as a level 1 financial investment in the IFRS 13
fair value hierarchy as the shares are traded in an active market
and therefore the value is based on quoted market prices. The fair
value adjustment of these shares represents the entire amount
charged to the income statement as 'other gains - net'.
10 Inventories
Unaudited Audited Unaudited
As at As at As at
31 Dec 30 Jun 31 Dec
2020 2020 2019
GBP000 GBP000 GBP000
Raw materials 126 192 -
Work in progress 872 733 524
Finished goods 668 316 240
1,666 1,241 764
---------- -------- ----------
11 Trade and other receivables
Unaudited Audited Unaudited
As at As at As at
31 Dec 30 Jun 31 Dec
2020 2020 2019
GBP000 GBP000 GBP000
Trade receivables 353 393 525
VAT receivable 375 188 241
Prepayments 460 576 644
Other receivables 190 180 -
1,378 1,337 1,410
---------- -------- ----------
12 Trade and other payables
Unaudited Audited Unaudited
As at As at As at
31 Dec 30 Jun 31 Dec
2020 2020 2019
GBP000 GBP000 GBP000
Current liabilities
Trade payables 1,450 807 1,096
Tax and social security 102 91 93
Accrued expenses 1,623 1,598 825
Lease liabilities - - 56
Other payables 35 59 39
3,210 2,555 2,109
---------- -------- ----------
Non-current liabilities
Lease liabilities - - 1
Accrued expenses 15 36 14
---------- -------- ----------
15 36 15
---------- -------- ----------
The prior period included recognition of right of use assets and
the corresponding lease liabilities reflecting the adoption by the
Group of IFRS 16. Upon a detailed review of the requirements of
IFRS 16 as at 30 June 2020, the Group determined that all of its
leasing arrangements were outside of the capitalisation
requirements of IFRS 16; consequently, all associated entries
(including the recognition of right of use assets and associated
lease liability) were reversed in the audited results for the year
ended 30 June 2020
The Group accrues for employer National Insurance contributions
that may become due on unexercised share-based payments. In the
Period GBP15k (31 Dec 2019: GBP14k) of the accrual has been
classified as a non-current liability.
13 Related party transactions
Transactions between the Company and its subsidiaries Diurnal
Limited and Diurnal Europe B.V., which are related parties, have
been eliminated on consolidation. The Company holds the Group's
treasury balances and provides funds to Diurnal Limited in order to
fund its operating activities. Such movements are recorded through
an intercompany loan account. The Company makes a management charge
to Diurnal Limited each year, which is disclosed in the table
below. Diurnal Europe B.V. recharges its operating expenses along
with a management charge to Diurnal Limited, which is disclosed in
the table below.
The following transactions with shareholders (subsidiaries of IP
Group plc) were recorded, excluding VAT, during the period:
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2020 2019 2020
GBP000 GBP000 GBP000
Purchase of goods and services
IP Group plc and subsidiaries 36 14 29
Recharges between group companies
Sales of goods from Diurnal Limited
to Diurnal Europe B.V. 2,203 - 1,159
Charges from Diurnal Group plc
to Diurnal Limited 336 347 659
Charges from Diurnal Europe B.V.
plc to Diurnal Limited 74 87 205
Purchase of goods and services from related parties comprise
management and consulting services, corporate finance, recruitment,
provision of Non-Executive Director, monitoring fees together with
expenses. These were made at arm's length and on normal commercial
trading terms.
Recharges between group companies are eliminated in the
consolidated financial statements.
Date of Preparation: February 2021 Code: CORP-GB-0104
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR DKBBKCBKDOBB
(END) Dow Jones Newswires
February 23, 2021 02:01 ET (07:01 GMT)
Diurnal (LSE:DNL)
Historical Stock Chart
From Apr 2024 to May 2024
Diurnal (LSE:DNL)
Historical Stock Chart
From May 2023 to May 2024