TIDMDNL
RNS Number : 3398Z
Diurnal Group PLC
14 September 2022
14 September 2022
Diurnal Group plc
("Diurnal" or the "Company")
Interim Results for the Twelve Months Ended 30 June 2022
Diurnal Group plc (AIM: DNL), the specialty pharmaceutical
company targeting patient needs in chronic endocrine (hormonal)
diseases, announces its results for the twelve months ended 30 June
2022 (the "Period") and following the publication of a trading
update on 26 July 2022.
Operational highlights (including post-period):
-- Proposed acquisition by Neurocrine Biosciences, Inc. ("Neurocrine")
o On 30 August 2022, Diurnal announced the terms of a
recommended cash acquisition pursuant to which Neurocrine intends
to acquire the entire issued and to be issued ordinary share
capital of Diurnal
o The acquisition is currently expected to complete during late
October or early November 2022, subject to satisfaction or (where
applicable) waiver of the conditions to the acquisition
-- Commercial products
o Alkindi(R) (hydrocortisone granules in capsules for
opening)
-- Alkindi(R) approved in Switzerland by SwissMedic
-- US partner Eton Pharmaceuticals announced co-promotion for
Alkindi Sprinkle(R) in US with Tolmar Pharmaceuticals
-- Distribution agreement with Vector Pharma for named patient
sales of Alkindi(R) covering Middle East and North Africa
o Efmody(R) (hydrocortisone modified-release hard capsules)
-- Initial commercial launches in Germany, UK, Austria and the Netherlands
-- Reimbursement approval in Norway
-- Post-Period end, agreed reimbursement in Italy, with launch planned for September 2022
-- Company to generate further clinical and health-economic data
to support a re-submission to the Scottish Medicines Consortium
(SMC) at the earliest possible opportunity following announcement
that Efmody(R) was not recommended for automatic reimbursement
within NHS Scotland
-- Extension of existing Alkindi(R) distribution and marketing
agreement with EffRx for Alkindi(R) in Switzerland to cover
Efmody(R)
o Expansion of global footprint for Alkindi(R) and Efmody(R)
through a new distribution agreement with ExCEEd Orphan for Central
Eastern European (CEE) countries and an extension of the existing
distribution agreement with Er-Kim covering Greece, Cyprus and
Malta
-- Development products
o DNL-0200 (hydrocortisone modified-release hard capsules -
previously referred to as Chronocort(R) , commercialised as
Efmody(R) in Europe)
-- Agreement of Special Protocol Assessment (SPA) for DNL-0200
US Phase 3 study (CONnECT) in congenital adrenal hyperplasia (CAH)
with the US Food and Drug Administration (FDA)
-- Agreement with Japanese Pharmaceuticals and Medical Devices
Agency (PMDA) that CONnECT study can act as the registration study
for DNL-0200 in Japan
-- First patients dosed in the CONnECT study with headline data expected in 2024
-- First patient dosed in the CHAMPAIN study (European Phase 2
trial of DNL-0200 in adrenal insufficiency (AI)), with headline
data now expected in Q1 2023
o DNL-0300 (native oral testosterone formulation - previously
referred to as DITEST(TM))
-- Submission of Investigational New Drug (IND) application and
subsequent feedback received from the FDA enabling finalisation of
protocol for multiple ascending dose (MAD) Phase I study
Financial highlights
-- Product sales (including royalties) for the Period increased
to GBP4.62m, representing year-on-year growth of 104% (twelve
months ended 30 June 2021: GBP2.27m)
o Alkindi(R) product sales (including royalties) for the Period
increased to GBP3.65m, representing year-on-year growth of 61%
(twelve months ended 30 June 2021: GBP2.27m)
o Efmody(R) initial product sales for the Period of GBP0.97m
(twelve months ended 30 June 2021: GBPnil)
o Total revenues for the Period of GBP4.68m, reflecting
licensing income of GBP0.06m (twelve months ended 30 June 2021:
total revenues of GBP4.37m, reflecting licensing income of
GBP2.10m)
-- Operating loss for the Period of GBP18.96m (twelve months
ended 30 June 2021: GBP11.60m), reflecting increased investment in
the product pipeline and the commercial roll-out of Efmody(R)
across Europe
-- Cash and cash equivalents at 30 June 2022: GBP16.49m (30 June 2021: GBP34.04m)
-- As a result of the slower Efmody(R) sales growth expected
following the SMC decision in March 2022, the Company has
previously indicated that it will require further financing to
reach profitability.
Corporate highlights
-- Appointment of Anders Härfstrand as Chairman and Jean-Michel
Cosséry and Deborah Jorn as Non-Executive Directors in November
2021, each bringing significant commercial experience to the
Board
-- Appointment of Richard Bungay as Interim Chief Executive
Officer following the departure of Martin Whitaker as Chief
Executive Officer
Richard Bungay, Interim Chief Executive Officer of Diurnal,
commented:
"Despite a number of challenges during the Period, we are
pleased that Efmody(R) revenues are currently in line with our
expectations in Germany, our first major launch market, and that
Alkindi(R) growth has resumed following a reduction in
pandemic-related restrictions."
"Our near-term focus is the commercial roll-out of Efmody(R) in
those European territories where we have been able to secure
reimbursement based on our current clinical data. In the
longer-term, the Company will continue to drive the momentum of
Alkindi(R) , and focus on the generation of new clinical data from
the CHAMPAIN and CONnECT studies, which we believe will provide
additional data to support continued Efmody(R) reimbursement
discussions in Europe."
As previously reported, Diurnal's financial year end has been
changed to 31 December, with the next statutory reporting due for
the 18-month period to 31 December 2022.
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 is a business press release containing financial
information and/or data for the benefit of shareholders and
potential investors. Data is included to allow informed investment
decisions.
This announcement contains inside information for the purposes
of the UK Market Abuse Regulation (UK MAR).
For further information, please visit www.diurnal.co.uk or
contact:
+44 (0)20 3727
Diurnal Group plc 1000
Richard Bungay, Interim Chief Executive Officer
Mike Scott, Interim Chief Financial Officer
Panmure Gordon (UK) Limited (Nominated Adviser +44 (0)20 7886
and Corporate 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
Alex Davis
Notes to Editors
About Diurnal Group plc
Diurnal Group plc is a European, UK-headquartered, specialty
pharmaceutical company dedicated to developing hormone therapeutics
to aid lifelong treatment for rare and chronic endocrine
conditions, including congenital adrenal hyperplasia, adrenal
insufficiency, hypogonadism and hypothyroidism. 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.
Operational Review
Following the change of leadership in April 2022, the Company
refocused resources on key priorities, in particular around the
commercial launch of Efmody(R) in Europe. The near-term focus for
Diurnal is the continued growth of its commercial products in key
European markets and the delivery of clinical data for Efmody(R) to
support both geographic expansion and use in a broader range of
patients with AI. These clinical studies are also expected to
provide key data to support future pricing and reimbursement
discussions in Europe.
Diurnal has continued to develop its European commercial
business, focused initially on the Group's two lead products,
Alkindi(R) and Efmody(R) , for patients suffering from the rare
diseases AI and CAH. The Company's long-term strategy is
underpinned by this commercialisation infrastructure and, as a
result, 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. The Group has also built
a pipeline of opportunities for future development (subject to
funding) and, if successful, subsequent commercialisation.
Alkindi(R) : establishing Diurnal's global commercial
network
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 the US (as Alkindi
Sprinkle(R) ) and has been proven to be effective in a formulation
specifically designed for children. Alkindi(R) has granted patents
covering the product until 2034, as well as regulatory protection
in Europe until 2028 through the paediatric use marketing
authorisation (PUMA) that was granted in 2018. The market
opportunity for the treatment of paediatric AI in Europe and the US
is estimated at $0.3bn.
Diurnal's commercialisation efforts for Alkindi(R) and Efmody(R)
are focused on the larger European markets (currently with a
presence in the UK, Germany, Austria and Italy). Outside of these
territories, Diurnal's strategy is to pursue distribution or
licensing deals, to make its products, once approved, available to
as broad a range of patients as possible. During the six months
ended 30 June 2022, the environment for Alkindi(R) sales in
Diurnal's core markets (UK, Germany, Italy and Austria) improved
somewhat, as healthcare systems gradually recover from the impact
of the Covid-19 pandemic which has impacted patients' ability to
visit hospitals and, consequently, physicians' ability to switch
these patients to Alkindi(R) .
During the first six months of 2022, Diurnal recorded its first
revenues from its partnerships in the Netherlands (with
Consilient), Switzerland (with EffRx) and several CEE countries
(with Er-Kim and ExCEEd Orphan). This adds to existing European
revenues generated by its partnership with FrostPharma in Sweden,
Denmark, Norway and Iceland. The Company further extended the reach
of Alkindi(R) through execution of a distribution deal with Vector
Pharma for named patient supply in 14 countries across the Middle
East and North Africa and an extension of the existing distribution
agreement with Er-Kim to cover Greece, Cyprus and Malta.
In the US, Diurnal's partner Eton Pharmaceuticals continues to
commercialise Alkindi Sprinkle(R) in a co-promotion deal with
Tolmar Pharmaceuticals, which has significantly expanded the
commercial efforts. Diurnal receives a royalty on net sales of
Alkindi Sprinkle(R) in the US, as well as sales-based milestones
which are triggered when annual revenues meet pre-determined
thresholds.
The Financial Review provides further detail on Alkindi(R)
revenues for the Period.
Efmody(R) : growing the European cortisol deficiency
franchise
Diurnal's second product, Efmody(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.
Efmody(R) is licensed in Europe and the UK and has granted patents
covering the product until 2034, as well as the potential to obtain
Orphan Drug Status in the US and other territories. The market
opportunity for the treatment of CAH in Europe is estimated at
$0.2bn.
In Europe, the Company is using the same commercial
infrastructure and supply chain for Efmody(R) that is already in
place for Alkindi(R) . In particular, there is a significant
crossover in the target audience, with Efmody(R) being available
for adolescent patients who are typically treated by the same
paediatric endocrinologists who are the target audience for
Alkindi(R) .
Efmody(R) is currently launched in Germany, the UK, the
Netherlands and Austria. In March 2022, the Company was
disappointed to receive notification from the SMC that Efmody(R)
had not been recommended for automatic reimbursement within
Scotland. As a result of the SMC decision, the Company's Efmody(R)
sales forecasts for the UK will be significantly impacted,
reflecting the reliance of a number of healthcare clinical
commissioning groups on the SMC assessment.
The Company intends to resubmit to the SMC at the earliest
possible opportunity using clinical data it is generating through
its CHAMPAIN and CONnECT clinical studies (as outlined below), as
well as real-world evidence being generated by key Efmody(R)
prescribers, particularly in Germany, which are designed to
elucidate potential benefits of treatment with Efmody(R) that have
been observed in the European Phase 3 study, the associated open
label extension study, and subsequently in-market. In particular,
prescribers of Efmody(R) are interested in understanding the
potential impact of fertility for patients with CAH.
Following the end of the Period, the Company was pleased to
receive confirmation from the Italian health authorities that
Efmody(R) will be reimbursed. The Company plans to formally launch
Efmody(R) in Italy at a major international conference during
September 2022. Pricing and reimbursement activities remain ongoing
in other key markets, most notably in Spain, with the outcome of
these discussions expected during 2022.
Reflecting the key drivers of its Efmody(R) European business,
Diurnal has recently refocused its European resources and, as a
result, has strengthened its German and Italian commercial teams,
as well as redeploying budget towards digital marketing
activities.
Outside of its core European markets, Diurnal intends to make
Efmody(R) available commercially through distribution or licensing
deals with local partners who can quickly gain market access.
Diurnal expanded its reach during the Period through extension of
its existing distribution deal with EffRx in Switzerland to include
both Alkindi(R) and Efmody(R) , and an expansion of its existing
relationship with Er-Kim to add Greece, Cyprus and Malta. Diurnal
continues to assess the opportunity for Efmody(R) in other global
markets.
The Financial Review provides further detail on Efmody(R)
revenues for the Period.
DNL-0200: expanding the global cortisol deficiency franchise
Diurnal continues to progress development of DNL-0200
(commercialised as Efmody(R) in Europe) in major markets outside of
Europe, in particular the US. Diurnal estimates the US market
opportunity for CAH is $0.6bn and for AI is $4.7bn.
During 2021, the Company agreed a SPA for the CONnECT Phase 3
study with the FDA. CONnECT will act as the registration study for
Efmody(R) as a treatment for CAH in the US and will also act as the
registration study for Japan, through inclusion of a cohort of
Japanese patients in the study. The study will also include sites
in France and Turkey, in order to maximise patient accrual rates.
Diurnal announced in early 2022 that the first clinical trial sites
had been opened, and in May 2022 announced the first patients had
been recruited into the study. CONnECT is expected to take 12
months to recruit, and patients will remain on the study for 52
weeks. Headline data from CONnECT is expected in 2024. Patients
completing treatment in CONnECT will be offered the opportunity to
participate in a long-term follow-on study (DIUR-015).
In addition to expanding the global availability of DNL-0200 to
CAH patients, Diurnal is also seeking to expand its utility into
the related condition, AI, a market opportunity of approximately
$6.5bn across Europe and the US. The Company has commenced a Phase
2 study of DNL-0200 compared to the approved product Plenadren(R)
in Europe (CHAMPAIN), which Diurnal believes, along with the
European 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 DNL-0200 in AI in the US.
Headline data from the CHAMPAIN study is now expected during Q1
2023: this small delay from the previous estimated timeline has
arisen from delays in receiving the required regulatory approvals,
which are now all in place.
DNL-0300: expanding the innovative product pipeline
Diurnal's third novel product, DNL-0300 (formerly referred to as
DITEST(TM)), is a native oral testosterone therapy for the
treatment of male hypogonadism. The estimated $4.5bn market in the
US and Europe for testosterone-based products for the treatment of
hypogonadism is dominated by topically-available products, which
have compliance and safety issues. 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.
Following the successful completion of a Phase 1 study
evaluating the pharmacokinetics, safety and tolerability of a
single dose of DNL-0300 in adult men with primary or secondary
hypogonadism, the Group received confirmation from the FDA that
DNL-0300 can progress to a NDA via the abbreviated 505(b)(2) route.
In March 2022, Diurnal received feedback from FDA enabling it to
finalise the clinical trial design for its next clinical trial, a
MAD study in men with low testosterone. The Company is currently
finalising a revised protocol ahead of commencement of this Phase 1
clinical study, which remains subject to securing additional
funding.
Recommended cash offer by Neurocrine
On 30 August 2022, the boards of Diurnal and Neurocrine
announced that they had reached agreement on the terms of a
recommended cash acquisition pursuant to which Neurocrine intends
to acquire the entire issued and to be issued ordinary share
capital of Diurnal. The offer remains subject to satisfaction (or
waiver) of the terms and conditions announced on 30 August 2022 and
to the full terms and conditions which shall be set out in the
Scheme Document to be sent to Shareholders in due course .
Diurnal continues to operate as an independent business until
the potential completion of this transaction.
Outlook
As previously announced, sales of Alkindi(R) and Efmody(R) are
gaining momentum; however, the ability of the Group to reach
profitability in the future remains dependent on the outcome of the
Company's clinical trials, funding, and the pace of commercial
adoption.
Richard Bungay
Interim Chief Executive Officer
14 September 2022
Financial Review
During 2021, the Group changed its financial year end from 30
June to 31 December, to better line up with its peer companies in
the US. Accordingly, the Group's next statutory reporting period
will be the 18 months ended 31 December 2022. The first interim
report was issued for the six months ended 31 December 2021; this
interim report covers the 12 months ended 30 June 2022.
Revenues and gross margin
Revenues from Alkindi(R) product sales (including royalties) for
the Period were GBP3.65m, representing year-on-year growth of 61%
(twelve months ended 30 June 2021: GBP2.27m). The Company's key
markets (UK, Germany, Italy and Austria) demonstrated continued
growth, with sales increasing by 35% reflecting the easing of the
impact of Covid-19 in the second half of the Period which had
previously restricted patients' ability to visit hospitals and,
consequently, physicians' ability to switch these patients to
Alkindi(R) . The Company has also seen significant growth outside
of these key markets with revenue increasing by 116% as a result of
the Company's partnering strategy broadening its geographical
reach, in particular the sales growth of Alkindi Sprinkle (R) in
the US.
The Company recorded initial Efmody(R) revenue from product
sales for the Period of GBP0.97m (twelve months ended 30 June 2021:
GBPnil), primarily reflecting sales in Germany since pricing
approval in September 2021, along with initial revenues in the UK,
the Netherlands and Austria.
Total revenue from product sales (including royalties) for the
Period was GBP4.62m (twelve months ended 30 June 2021: GBP2.27m),
representing year-on-year growth of 104%.
Total revenue for the Period was GBP4.68m, which included
licensing income of GBP0.06m ( twelve months ended 30 June 2021:
GBP4.37m, including licensing income of GBP2.10m).
Gross margin on product sales for the Period was 78% (twelve
months ended 30 June 2021: 66%), with the increase over the
previous period driven partly by Efmody(R) product sales (which are
at a higher gross margin than Alkindi(R) ) and Alkindi(R) royalty
revenues that carry higher gross margins, and partly by the
suppressed gross margin in 2021 as a result of historic price
adjustments and stock obsolescence in the Nordic markets.
Operating expenses
Research and development (R&D) expenditure for the Period
was GBP12.10m (twelve months ended 30 June 2021: GBP6.92m). The
significant planned increase in R&D costs during the Period
primarily reflected the start-up of the CONnECT US Phase 3 study
with Efmody(R) in CAH, the CHAMPAIN European Phase 2 study with
Efmody(R) in AI and the initiation of a long-term follow-on study
(DIUR-015) for patients completing treatment in CONnECT. Other
significant R&D costs included ongoing activities relating to
the manufacturing scale-up and associated validations for Efmody(R)
, and DNL-0300 non-clinical activities in support of the IND
application to the FDA.
Selling and distribution expenses for the Period increased to
GBP6.72m (twelve months ended 30 June 2021: GBP5.24m) reflecting
the preparation and ongoing commercial launches of Efmody(R) in
Europe and global territory expansion of Alkindi(R) . In
particular, the Company initiated health economic modelling and
pricing work to support pricing and reimbursement applications
across Europe which were submitted following the regulatory
approval of Efmody(R) in 2021. Other notable selling and
distribution expenses included the ongoing investment into digital
channels and market intelligence to add to the current
commercialisation efforts in the key European territories, a
detailed commercial analysis of the potential of Efmody(R) in the
US (see operational review) and costs incurred for the transfer to
a new pharmacovigilance provider to support the expansion of the
Group's commercial footprint. Selling and distribution expenses for
the Period also contain a charge for obsolete inventories amounting
to GBP0.50m (twelve months ended 30 June 2021: GBP0.08m) and an
impairment expense of GBP0.13m relating to tooling that has become
idle (twelve months ended 30 June 2021: GBPnil).
Administrative expenses for the Period were GBP3.69m (twelve
months ended 30 June 2021: GBP3.06m). Costs for the Period included
recruitment charges and fees relating to the Board and management
changes and increased professional fees. In addition, in line with
many other companies Diurnal has experienced continued increases in
the cost of corporate insurances during the Period, reflecting a
broader economic backdrop of increased risk arising from recent
corporate failures and the impact of Covid-19.
Operating loss
Operating loss for the Period increased to GBP18.96m (twelve
months ended 30 June 2021: GBP11.60m), reflecting the impact of
increased operating expenses outlined above.
Financial income and expense
Net financial expense in the Period was GBP0.01m (twelve months
ended 30 June 2021: GBP0.06m income).
Loss on ordinary activities before tax
Loss before tax for the Period was GBP18.97m (twelve months
ended 30 June 2021: GBP11.54m).
Tax
During the Period the Company finalised and submitted its
R&D tax credit claim in respect of the year ended 30 June 2021;
this final amount of GBP1.51m was received in 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 GBP2.38m as at 30 June 2022.
The Group has not recognised any deferred tax assets in respect
of trading losses arising in the Period.
Earnings per share
Loss per share for the Period increased to 9.8 pence (twelve
months ended 30 June 2021: 7.3 pence), with the increase in loss
for the Period partly mitigated by the increase in weighted average
number of shares outstanding in the Period.
Cash flow
Net cash used in operating activities during the Period was
GBP18.79m (twelve months ended 30 June 2021: GBP10.66m), with the
increase arising from the increase in operating outflows, including
prepayments made to the contract research organisations (CROs) who
are running the CONnECT, CHAMPAIN and DIUR-015 studies at the
Period end of GBP3.36m (30 June 2021: GBP0.80m).
Net cash from investing activities during the Period of
GBP0.73m, largely representing the proceeds from the disposal of
the entire holding of shares held in Eton Pharmaceuticals.
Net cash from financing activities during the Period of GBP0.14m
represents the proceeds from share option exercises during the
period.
Balance sheet
Total assets at 30 June 2022 decreased to GBP26.60m (30 June
2021: GBP41.79m), primarily driven by the increase in operating
outflows.
Inventories at 30 June 2022 decreased to GBP1.36m (30 June 2021:
GBP1.63m), primarily reflecting an increase in the Groups provision
for obsolete stock (see Note 11).
Cash and cash equivalents at 30 June 2022 were GBP16.49m (30
June 2021: GBP34.04m).
Total liabilities at 30 June 2022 increased to GBP5.08m (30 June
2021: GBP4.23m), reflecting an increased level of trade payables
and accrued expenses as a result of the increase in operating
expenses.
Net assets at 30 June 2022 were GBP21.53m (30 June 2021:
GBP37.56m).
Financial outlook
As previously announced, as a result of the slower Efmody(R)
sales growth now expected following the SMC decision in March 2022,
the Company has previously indicated that it will require further
financing to reach profitability. Taking into account the Company's
existing financial commitments, and its inability to secure access
to any material non-dilutive funding, the Company will require
additional equity funding in 2023.
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 2021, 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.
Mike Scott
Interim Chief Financial Officer
14 September 2022
Consolidated income statement
for the twelve months ended 30 June 2022
Unaudited Audited
12 months 12 months
ended ended
30 Jun 30 Jun
2022 2021
Note GBP000 GBP000
Revenue 5 4,684 4,371
Cost of sales (1,023) (779)
---------- ----------
Gross profit 3,661 3,592
Research and development
expenditure (12,100) (6,915)
Selling and distribution
expenses (6,717) (5,236)
Administrative expenses (3,690) (3,056)
Other (losses)/gains -
net (109) 15
---------- ----------
Operating loss (18,955) (11,600)
Net financial (expense)/income (11) 62
Loss before tax (18,966) (11,538)
Taxation 6 2,396 1,489
Loss for the period (16,570) (10,049)
---------- ----------
Basic and diluted loss
per share (pence per share) 7 (9.8) (7.3)
---------- ----------
All activities relate to continuing operations.
The Notes form part of this condensed financial information.
Consolidated statement of comprehensive income
for the twelve months ended 30 June 2022
Unaudited Audited
12 months 12 months
ended ended
30 Jun 30 Jun
2022 2021
GBP000 GBP000
Loss for the period and
total comprehensive loss
for the period (16,570) (10,049)
The Notes form part of this condensed financial information.
Consolidated balance sheet
as at 30 June 2022
Unaudited Audited
As at As at
30 Jun 30 Jun
2022 2021
Note GBP000 GBP000
Non-current assets
Intangible assets 8 184 92
Property, plant and equipment 9 16 148
200 240
---------- ---------
Current assets
Inventories 11 1,364 1,625
Research and development
tax credit claims receivable 2,381 1,485
Trade and other receivables 12 6,165 3,433
Investments held at fair
value through profit and
loss 10 - 970
Cash and cash equivalents 16,492 34,037
26,402 41,550
---------- ---------
Total assets 26,602 41,790
---------- ---------
Current liabilities
Trade and other payables 13 (5,044) (4,163)
(5,044) (4,163)
---------- ---------
Non-current liabilities
Trade and other payables 13 (32) (63)
(32) (63)
---------- ---------
Total liabilities (5,076) (4,226)
---------- ---------
Net assets 21,526 37,564
---------- ---------
Equity
Share capital 8,486 8,397
Share premium 77,461 77,414
Group reconstruction reserve (2,943) (2,943)
Accumulated losses (61,478) (45,304)
Total equity 21,526 37,564
---------- ---------
The Notes form part of this condensed financial information.
Consolidated statement of changes in equity
for the twelve months ended 30 June 2022
Share Share Group reconstruction Accumulated
capital premium reserve losses Total
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 30
June 2020 (audited) 6,082 50,967 (2,943) (35,721) 18,385
Loss for the period
and total comprehensive
loss for the period - - - (10,049) (10,049)
--------- --------- --------------------- ------------ ---------
Equity settled
share-based payment
transactions - - - 466 466
Issue of shares
for cash 2,315 28,205 - - 30,520
Costs charged
against share
premium - (1,758) - - (1,758)
Total transactions
with owners recorded
directly in equity 2,315 26,447 - 466 29,228
Balance at 30
June 2021 (audited) 8,397 77,414 (2,943) (45,304) 37,564
Loss for the period
and total comprehensive
loss for the period - - - (16,570) (16,570)
--------- --------- --------------------- ------------ ---------
Equity settled
share-based payment
transactions - - - 396 396
Issue of shares
for cash 89 47 - - 136
Total transactions
with owners recorded
directly in equity 89 47 - 396 532
Balance at 30
June 2022 (unaudited) 8,486 77,461 (2,943) (61,478) 21,526
--------- --------- --------------------- ------------ ---------
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 twelve months ended 30 June 2022
Unaudited Audited
12 months 12 months
ended ended
30 Jun 30 Jun
2022 2021
GBP000 GBP000
Cash flows from operating activities
Loss for the period (16,570) (10,049)
Adjustments for:
Fair value adjustment to investments 109 (15)
Depreciation, amortisation and
impairment 158 24
Share-based payment 396 466
Net foreign exchange (gain)/loss (373) 109
Finance costs - net 11 (62)
Taxation (2,396) (1,489)
Decrease/(Increase) in inventories 261 (384)
(Increase) in trade and other
receivables (2,732) (2,096)
Increase in trade and other
payables 850 1,635
Cash used in operations (20,286) (11,861)
Net tax received 1,500 1,199
Net cash used in operating
activities (18,786) (10,662)
---------- ----------
Cash flows from investing activities
Additions of property, plant
and equipment (6) (138)
Capitalisation of research and
development expenditure (112) (25)
Proceeds from sale of investment 861 713
Interest (paid)/received (11) 62
Net cash from investing activities 732 612
---------- ----------
Cash flows from financing activities
Net proceeds from issue of share
capital 136 28,762
Net cash from financing activities 136 28,762
---------- ----------
Net (decrease)/increase in cash
and cash equivalents (17,918) 18,712
Cash and cash equivalents at
the start of the period 34,037 15,434
Effects of exchange rate changes
on cash and cash equivalents 373 (109)
Cash and cash equivalents at
the end of the period 16,492 34,037
---------- ----------
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 UK adopted IAS 34 'Interim
Financial Reporting'. They should be read in conjunction with
audited consolidated financial statements for the year ended 30
June 2021, which were prepared in accordance with International
Accounting Standards in conformity with the requirements of the
Companies Act 2006 as applicable to companies using International
Financial Reporting Standards (IFRS) and also in accordance with
IFRS adopted pursuant Regulation (EC) No 1606/2002 as it applies in
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 twelve months ended 30 June 2022 and for the financial year
ended 30 June 2021 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 2021
have been extracted from the audited statutory accounts which were
approved by the Board of Directors on 13 September 2021 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
The Group is subject to a number of risks that are
characteristic of development and commercialisation of novel
therapeutic agents due to the complex nature of the industry. These
risks include, amongst others, uncertainties inherent to clinical
trials, regulatory approvals of pipeline programmes, and the
outcome of pricing and reimbursement discussions. Ultimately, the
attainment of a strong and profitable commercial business and the
future viability of the Group are contingent on future uncertain
events such as the ability to obtain adequate financing to support
the Group's cost structure and to conduct its development and
commercialisation activities. The Group's failure to raise capital
as and when needed could have a negative impact on its financial
condition and ability to pursue its business strategies.
The Group has historically experienced net losses and
significant cash outflows from cash used in operating activities,
which reflect the development and early commercialisation stage of
the portfolio. For the Period ended 30 June 2022, the Group made an
operating loss of GBP18,955k on revenue of GBP4,684k and used net
cash in operating activities of GBP18,786k. Cash and cash
equivalents at 30 June 2022 were GBP16,492k.
The Directors have prepared cash flow forecasts and considered
the cash flow requirement for the Group. These forecasts show that
to continue funding currently ongoing clinical trials and European
commercialisation activities, further equity financing will be
required in 2023. Depending on the commercial progress with its
approved products, further equity financing beyond this may be
required prior to the Group reaching sustainable profitability.
Assuming completion of the proposed acquisition of Diurnal by
Neurocrine, the Company expects Neurocrine to support future
financing requirements. Prior to completion of the proposed
acquisition, this requirement for additional financing represents a
material uncertainty that may cast significant doubt upon the
Group's and parent company's ability to continue as a going
concern.
Based on the above, the Directors believe it remains appropriate
to prepare the financial statements for the twelve months ended 30
June 2022 on a going concern basis. However, these circumstances
represent a material uncertainty that may cast significant doubt
upon the Group's ability to continue as a going concern and,
therefore to continue realising its assets and discharging its
liabilities in the normal course of business. 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 twelve
months ended 30 June 2022 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 2021 and expected to be adopted in the
financial period ending 31 December 2022. Where new IFRS standards
amendments or interpretations became effective in the twelve months
to 30 June 2022, 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 Audited
12 months 12 months
ended ended
30 Jun 30 Jun
2022 2021
GBP000 GBP000
Sales of goods
- Alkindi(R) (including royalties) 3,653 2,267
- Efmody(R) 969 -
---------- ----------
Total sales of goods 4,622 2,267
Licence fees 62 2,104
---------- ----------
4,684 4,371
---------- ----------
An analysis of revenue by the country of destination is set out
below:
Unaudited Audited
12 months 12 months
ended ended
30 Jun 30 Jun
2022 2021
GBP000 GBP000
UK 1,372 1,108
Rest of Europe 2,828 1,094
USA & Rest of World 484 2,169
---------- ----------
4,684 4,371
---------- ----------
6 Taxation
Unaudited Audited
12 months 12 months
ended ended
30 Jun 30 Jun
2022 2021
GBP000 GBP000
Current tax:
- UK corporation tax on losses of period - -
- Dutch corporation tax on subsidiary
profits for the period 5 1
- Research and development tax credit
receivable for the current period (2,381) (1,485)
- Prior period adjustment in respect
of research and development tax credit (20) (5)
Deferred tax:
- Origination and reversal of temporary - -
differences
Tax on loss on ordinary activities (2,396) (1,489)
---------- ----------
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 made in respect of the
year ended 30 June 2021 was finalised at GBP1,505k, and was
received from HMRC during the Period.
7 Loss per share
Unaudited Audited
12 months 12 months
ended ended
30 Jun 30 Jun
2022 2021
Loss for the period (GBP000) (16,570) (10,049)
Weighted average number of shares
(000) 169,182 137,090
Basic and diluted loss per share
(pence per share) (9.8) (7.3)
---------- ----------
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.
8 Intangible assets
Internally
Acquired generated
patents development
and licences costs Total
GBP000 GBP000 GBP000
Cost
Balance at 1 July 2020 39 90 129
Additions - 25 25
-------------- ------------- -------
Balance at 30 June 2021 39 115 154
Additions - 112 112
Balance at 30 June 2022 39 227 266
-------------- ------------- -------
Accumulated Amortisation
Balance at 1 July 2020 39 11 50
Charge for the period - 12 12
Balance at 30 June 2021 39 23 62
Charge for the period - 20 20
Balance at 30 June 2022 39 43 82
-------------- ------------- -------
Net book values
30 June 2021 (audited) - 92 92
-------------- ------------- -------
30 June 2022 (unaudited) - 184 184
-------------- ------------- -------
Capitalisation of development costs
Capitalisation of development costs requires analysis of the
technical feasibility and commercial viability of the project
concerned. Capitalisation of the costs will only be made where
there is evidence that an economic benefit will flow to the Group.
The Group commenced capitalisation of ongoing development costs of
its products from the point that the respective market
authorisations were received as detailed below:
- European development costs of Alkindi(R) following approval of
the paediatric use marketing authorisation by the European
Commission in February 2018
- Global development costs of Alkindi(R) following the grant of
US market authorisation by the US Food and Drug Administration in
September 2020; and
- European development costs of Efmody(R) for the treatment of
CAH following approval by the European Commission in May 2021
9 Property, plant and equipment
Equipment
GBP000
Cost
Balance at 1 July 2020 84
Additions 138
Disposals (9)
----------
Balance at 30 June 2021 213
Additions 6
Disposals (42)
Balance at 30 June 2022 177
----------
Accumulated Depreciation
Balance at 1 July 2020 61
Charge for the period 12
Impairment -
Disposals (8)
Balance at 30 June 2021 65
Charge for the period 10
Impairment 128
Disposals (42)
Balance at 30 June 2022 161
----------
Net book values
30 June 2021 (audited) 148
----------
30 June 2022 (unaudited) 16
----------
The current period impairment relates to tooling that has become
idle and therefore has been fully impaired in the Period.
10 Investments held at fair value through profit and loss
Investments
GBP000
Cost
Balance at 1 July 2020 1,668
Disposals (713)
Fair value adjustment to investments 15
------------
Balance at 30 June 2021 (audited) 970
Additions -
Disposals (861)
Fair value adjustment to investments (109)
------------
Balance at 30 June 2022 -
------------
Investments held at fair value through the profit and loss
solely relate to 379,474 shares of Eton Pharmaceuticals that were
received as part of the upfront consideration for the exclusive
licence agreement of Alkindi Sprinkle(R) in the US signed in March
2020. During 2021 the Group sold its entire holding of 379,474
shares realising an overall gain since acquisition of GBP533k. The
fair value adjustment of these shares represents the entire amount
charged to the income statement as 'Other (losses)/gains -
net'.
11 Inventories
Unaudited Audited
As at As at
30 Jun 30 Jun
2022 2021
GBP000 GBP000
Raw materials 106 123
Work in progress 685 1,046
Finished goods 573 456
1,364 1,625
---------- --------
Inventories recognised as an expense in cost of sales for the
twelve months to 30 June 2022 amounted to GBP1,023k (twelve months
to 30 June 2021: GBP779k). A charge for obsolete inventories
amounting to GBP503k has been recognised in selling and
distribution expenses in the Period (twelve months to 30 June 2021:
GBP78k).
12 Trade and other receivables
Unaudited Audited
As at As at
30 Jun 30 Jun
2022 2021
GBP000 GBP000
Trade receivables 1,070 361
VAT receivable 354 501
Prepayments 4,046 1,460
Other receivables 695 1,111
6,165 3,433
---------- --------
The increase in prepayments reflects prepaid expenses made to
clinical research organisations (CROs) in respect of the CONnECT,
CHAMPAIN and DIUR-015 clinical studies totalling GBP3,359k at 30
June 2022 (30 June 2021: GBP797k).
13 Trade and other payables
Unaudited Audited
As at As at
30 Jun 30 Jun
2022 2021
GBP000 GBP000
Current liabilities
Trade payables 1,758 1,728
Tax and social security 177 121
Accrued expenses 2,868 2,195
Deferred Income 135 -
Other payables 106 119
5,044 4,163
---------- --------
Non-current liabilities
Accrued expenses 32 63
---------- --------
32 63
---------- --------
The Group accrues for employer National Insurance contributions
that may become due on unexercised share-based payments. In the
Period GBP32k (30 Jun 2021: GBP63k) of the accrual has been
classified as a non-current liability.
14 Related party transactions
The Group purchases services from related parties in respect of
some Non-Executive Director fees and expenses. The following
transactions were recorded in respect of such services during the
period:
Unaudited Audited
12 months 12 months
ended ended
30 Jun 30 Jun
2022 2021
GBP000 GBP000
Purchase of goods and services
IP Group plc and subsidiaries 50 50
Purchases of the goods and services above were made at arm's
length and on normal commercial trading terms. Amounts owing to IP
Group plc and subsidiaries as at 30 June 2022 amounted to GBP11k
(30 June 2021: GBP34k).
Date of Preparation: September 2022 Code: CORP-GLO-0041
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END
IR BKNBNABKDDCD
(END) Dow Jones Newswires
September 14, 2022 02:01 ET (06:01 GMT)
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