TIDMDNL
RNS Number : 5504C
Diurnal Group PLC
11 February 2020
11 February 2020
Diurnal Group plc
("Diurnal" or the "Company")
Interim Results for the Six Months Ended 31 December 2019
Strong revenue performance for Alkindi(R) ahead of further
country launches in Europe, with operating losses reduced by
53%
Two major regulatory filings completed during the Period
Early stage pipeline progress continues; positive oral native
testosterone clinical trial results
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 2019 (the "Period").
Operational highlights
-- Alkindi(R) (hydrocortisone granules in capsules for opening)
o Launches in Sweden, Denmark, Norway and Iceland (with partner
Frost Pharma) during the Period, following initial launches in UK,
Germany and Austria
o Launch of Alkindi(R) in Italy subsequent to the Period end
o Alkindi(R) New Drug Application (NDA) submitted to the US Food
and Drug Administration (FDA)
o Partnering discussions for Alkindi(R) and Chronocort(R)
ongoing in the US
o Submission of Marketing Authorisation Application (MAA) in
Australia following the grant of Orphan Drug Designation
-- Chronocort(R) (modified release hydrocortisone)
o Submission of MAA to the European Medicines Agency (EMA) along
with an application for confirmation of Orphan Drug Status
-- DITEST(TM) (native oral testosterone formulation)
o Positive headline results from the DITEST(TM) (native oral
testosterone formulation) Phase I proof-of-concept clinical trial
in target hypogonadal patients, with potential to be the first
effective oral native testosterone treatment in an estimated $4.8bn
global market
o Diurnal's third product in clinical development continuing
progress in early stage pipeline
Financial overview
-- Alkindi(R) revenues of GBP1.1m, representing 516% year-on-year growth (H1 2018/19: GBP0.2m)
-- Operating loss of GBP4.6m, a reduction of 53% year-on-year
(H1 2018/19: GBP9.7m) reflecting increased revenues and decreased
investment in clinical development expenses
-- Held-to-maturity financial assets, cash and cash equivalents
at 31 December 2019 of GBP4.6m (31 December 2018: GBP6.9m); 30 June
2019 of GBP9.1m
Martin Whitaker, PhD, Chief Executive Officer of Diurnal,
commented:
"Diurnal has continued to experience strong commercial traction
for Alkindi(R) with robust growth in sales. Further Alkindi(R)
launches are planned for 2020 in Europe, in addition to the recent
launch in Italy. We also delivered on two major regulatory
milestones, filing both the US NDA for Alkindi(R) and European MAA
for Chronocort(R) submissions during Q4 2019. Diurnal anticipates
US regulatory approval for Alkindi(R) in Q4 2020 and European
regulatory approval for Chronocort(R) in Q1 2021. There also
continues to be strong interest in Alkindi(R) and Chronocort(R)
from potential US partners and we expect to conclude a US licensing
deal in H1 2020. During the Period, Diurnal also announced positive
Phase I clinical data from its oral native testosterone product,
DITEST(TM), adding a potentially valuable clinical-stage product to
its expanding endocrinology-focused pipeline. Diurnal believes that
it is strongly positioned to capitalise on the progress with its
pipeline and to secure funding for the next stage of its
development into a world-leading endocrinology specialty pharma
company."
In the Interim Results:
-- "H1" refers to the six-month period ended 31 December
-- "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 Joint Broker) 2500
Corporate Finance: Freddy Crossley, Emma Earl
Corporate Broking: James Stearns
+44 (0)20 7894
Cantor Fitzgerald Europe (Joint Broker) 7000
Corporate Finance: Phil Davies, Will Goode,
Michael Boot
Healthcare Equity Sales: Andrew Keith
+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-based specialty pharma company
developing high quality products for the global market for the
life-long treatment of chronic endocrine conditions, including
Congenital Adrenal Hyperplasia and Adrenal Insufficiency. 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 made significant progress towards
its vision of becoming a world-leading endocrinology specialty
pharma company. Underpinning this vision is the development of a
strong commercial business in Europe, initially focused on delivery
of the Group's two lead products, Chronocort(R) and Alkindi(R) ,
for patients suffering from the orphan diseases congenital adrenal
hyperplasia (CAH) and adrenal insufficiency (AI), a potential
market of $2.1bn. The Group is also seeking to maximise the value
of its products in the rest of the world, in particular, to address
large opportunities for CAH and AI in the US (c. $1.1bn) and Japan
(c. $0.4bn), as well as other valuable markets around the world.
The Group has also strengthened its pipeline during the Period
following the successful completion of the first clinical study
with DITEST(TM), its native oral testosterone replacement product,
a potential market of approximately $4.8bn.
Alkindi(R) Europe: building a commercial platform to support
future revenue growth
Alkindi(R) is the first product specifically designed for young
children suffering from paediatric AI, and the related condition
CAH. Alkindi(R) is approved in Europe and has been proven to be
effective, easy to administer and has a safety profile similar to
other hydrocortisone products. Given the specialist prescribing
base, and to retain the maximum commercial value of the product,
Diurnal is commercialising Alkindi(R) itself in larger European
markets, focusing its marketing efforts initially on patients aged
0-6 years where the unmet need is highest.
Following the approval of Alkindi(R) in 2018, Diurnal has now
launched the product directly in the UK, Germany and Austria, and
with its distribution partner Frost Pharma in Sweden, Denmark,
Norway and Iceland. Alkindi(R) revenues for the Period of GBP1.1m
demonstrated strong year-on-year growth of over 500%, reflecting
both continued growth in Germany and the UK, where Alkindi(R) was
launched during 2018, as well as sales from new launches in the
Nordic region. Diurnal believes that the successful pricing
approvals and subsequent launches confirm the robust health
economic arguments supporting Alkindi(R) .
Following approval of pricing for Alkindi(R) during 2019,
Diurnal launched the product in Italy shortly after the end of the
Period. Diurnal also received pricing approval for Alkindi(R) in
the Netherlands after the end of the Period and continues pricing
discussions in Spain. The Group expects that a series of country
launches during 2020 will continue to provide strong revenue growth
for Alkindi(R) .
Diurnal continues to assess the most effective means of
accessing additional European markets for Alkindi(R) and will
either use in-house resources or engage with a distribution
partner.
Diurnal has continued to develop a robust and efficient product
supply chain during the Period, in particular to minimise potential
disruption to the Group's operations after the end of the
transitional period following the UK's departure from the EU on 31
January 2020 and also to minimise distribution costs. The Group's
supply chain remains located entirely within the EU. Diurnal's
wholly-owned subsidiary, Diurnal Europe B.V., registered in the
Netherlands, holds the Alkindi(R) EU marketing authorisation and
other required authorisations and licenses following the UK's
departure from the EU. Diurnal has previously established a
satellite distribution facility in the UK, to ensure continuity of
supply for the UK market.
The Company believes that its European commercial infrastructure
is a valuable asset that can not only be leveraged significantly in
the event of a successful approval of Chronocort(R) in Europe, but
also makes Diurnal an attractive partner for companies seeking to
commercialise endocrinology focused products in Europe. Diurnal
continues to assess such business development opportunities where
they are additive to its business model.
Chronocort(R) Europe: expanding the European product
franchise
Diurnal's second product candidate, Chronocort(R) , provides a
drug release profile that the Group believes better mimics the
body's natural cortisol circadian rhythm, which current therapy is
unable to replicate, and is designed to improve disease treatment
for adults with CAH, as measured by androgen (male sex hormone)
control.
During 2018, Diurnal completed its European pivotal Phase 3
clinical trial of Chronocort(R) for the treatment of CAH in adults,
with a total of 122 patients enrolled across 11 clinical sites, the
largest interventional study conducted to date in this patient
population. In this study, Chronocort(R) was able to demonstrate
24-hour control of androgens in its European Phase 3 trial in CAH.
However, it did not meet the primary endpoint of superior control
compared to conventional glucocorticoid therapy. Subsequently,
Diurnal performed a detailed analysis of the study data,
identifying important differences between Chronocort(R) and the
control arm of the trial based upon a number of relevant clinical
parameters. Based on these findings, Diurnal held a positive
Scientific Advice meeting with the EMA in Q2 2019, which confirmed
the existing clinical and regulatory path for Chronocort(R) . An
MAA was subsequently filed in Q4 2019. The MAA submission seeks
approval for adolescent CAH patients in addition to adults,
providing the potential for transition of paediatric patients from
Alkindi(R) to Chronocort(R) , along with an application for
confirmation of Orphan Drug Status.
Patients completing treatment in the European Phase 3 study had
the option to enrol into a long-term safety extension study,
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 drop-out rates from this study have been very low
to date. Diurnal has performed two interim analyses of the data
from the ongoing study; notably, a number of patients have been
treated for at least 30 months and show sustained benefit from
extended Chronocort(R) treatment, consistent with feedback from the
study investigators in this open-label trial.
Assuming the EMA approves Chronocort(R) for the treatment of
CAH, Diurnal subsequently intends to submit a line extension in
Europe for the treatment of AI, potentially a much larger market
opportunity, using existing clinical data, once the existing Orphan
Drug Status for the product Plenadren(R) in the treatment of adult
AI has expired in late 2021.
The Group intends to use its commercial organisation and supply
chain developed for Alkindi(R) for the planned future launch of
Chronocort(R) in Europe. In addition, the pricing work undertaken
for Alkindi(R) has provided insights into the cortisol deficiency
market that will be extremely valuable in developing health
economic arguments for Chronocort(R) .
Alkindi(R) and Chronocort(R) US: major licensing opportunity
During the Period, Diurnal successfully completed the Alkindi(R)
New Drug Application (NDA) application in the US, along with
application for Orphan Drug Status, with potential for approval in
late 2020. In the US, the product will be designated "Alkindi(R)
Sprinkle", reflecting the unique formulation for a
hydrocortisone-based product for paediatric patients.
Diurnal has developed a Phase 3 registration package for
Chronocort(R) in the US designed to recruit up to 150 patients with
CAH, randomised to either receive Chronocort(R) twice-daily or
standard-of-care. The study design reflects previous discussions
with the FDA and builds upon key learnings from the European Phase
3 study. Diurnal believes that the preparatory work undertaken for
this study, including identification of key clinical sites, will
substantially accelerate the clinical trial start-up timings.
Diurnal has also developed a Phase 2 study designed to assess the
utility of Chronocort(R) in AI, which represents a sizeable
commercial opportunity (potentially $0.9bn in the US alone) and
with a highly favourable competitive landscape in the US. Diurnal
believes that both these studies are ready to commence, ideally
with the support of a US partner.
As highlighted previously, Diurnal is in discussion with a range
of potential licensing partners for Alkindi(R) and Chronocort(R)
and aims to close a deal during the first half of 2020.
Rest of world: maximising late-stage pipeline value
Diurnal continues to refine its strategy to optimise market
access for its products. Outside of key European markets and the
US, the Group aims to maximise revenues from Alkindi(R) and
Chronocort(R) by entering into distribution agreements. The Group
seeks to access territories where there is the potential for a
price which reflects the innovation for its products, and which can
use the European or US regulatory dossiers as the basis for local
regulatory submissions. This approach is exemplified by its
agreements with Emerge Health for the marketing of Alkindi(R) and
Chronocort(R) in Australia and New Zealand, and Medison for the
marketing of Alkindi(R) and Chronocort(R) in Israel. During the
Period, Diurnal's partner Emerge Health submitted an MAA for
Alkindi(R) in Australia, following the grant of Orphan Drug
Designation in the first half of 2019. Diurnal expects approval of
Alkindi(R) both in Australia and, with its partner Medison, in
Israel during 2020.
Diurnal continues to assess its strategy for entry into the
important Japanese market with a local partner, including the
potential for Orphan Drug Designation. Japan is an attractive
market for Diurnal's late-stage cortisol deficiency pipeline, with
a well-developed pharmaceutical market, including Orphan Drug
Designation and a large population, with the market for CAH and AI
estimated at $0.4bn.
DITEST(TM): building value in the product pipeline
During the Period, Diurnal announced positive headline results
from the Company's Phase I proof-of-concept clinical trial with
DITEST(TM) (native oral testosterone formulation), which has the
potential to be the first effective oral native testosterone
treatment in an estimated $4.8bn global market. This study, which
confirmed the positive findings in the Group's successful in vivo
pre-clinical studies, evaluated the pharmacokinetics, safety and
tolerability of DITEST(TM) in the target patient group of 24 adult
men with primary or secondary hypogonadism. The market for
testosterone-based products for the treatment of hypogonadism is
fragmented and many of the commercially available testosterone
replacements have their drawbacks, with topically-available
products having compliance and safety issues, while key issues with
the use of alternative oral modified testosterone products
(testosterone undecanoate) show variability in absorption and the
requirement for a high-fat meal to achieve therapeutic testosterone
levels.
The primary endpoint of the trial compared the rate and extent
of absorption of testosterone from a single dose of DITEST(TM)
120mg with a single dose of testosterone undecanoate 80mg in the
fed state in hypogonadal men was met, DITEST(TM) was shown to
achieve testosterone levels within the healthy young male adult
normal range after oral administration, with levels that were less
variable than testosterone undecanoate.
Secondary endpoints demonstrated that there was no impact on the
rate and extent of absorption of testosterone from DITEST(TM) 200mg
whether taken with either food or in the fasted state, representing
a major difference with testosterone undecanoate. The safety and
tolerability of two different doses of DITEST(TM) were also
assessed in the study. 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.
Diurnal is currently assessing the regulatory path for
registration of DITEST(TM) in the key US market in order to
determine the optimum development pathway, whether in-house or in
collaboration with a partner.
Outlook
If approved by the EMA, Chronocort(R) will join Alkindi(R) in
Diurnal's portfolio of approved products, enlarging the Company's
commercial cortisol replacement therapy franchise. This should
further enable 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 $0.4bn in Europe alone. Diurnal also expects
additional progress for Alkindi(R) , with further country launches
scheduled during 2020 to accelerate growth of revenues.
In the US, Diurnal has received strong interest in Alkindi(R)
and Chronocort(R) and will continue to progress licensing
discussions, including the potential for co-development of
Chronocort(R) in the US, both in CAH and AI. The US remains an
important market for Diurnal's late-stage pipeline focused on
cortisol deficiency, with a combined market size for the treatment
of CAH and paediatric AI estimated at over $0.1bn, and a future
expansion opportunity in adult AI, which represents a $0.9bn market
opportunity in the US.
DITEST(TM) represents a further valuable addition to Diurnal's
growing pipeline of novel endocrinology treatments, and the Company
aims to elucidate the optimal development path during 2020 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
Total revenues recorded for the Period were GBP1.1m (H1 2018/19:
GBP0.2m), which is net of provisions for stock placed into the
wholesale distribution chain on a sale-or-return basis and rebates.
The strong growth in revenues reflects both continued growth in
Germany and the UK, where Alkindi(R) was launched in May 2018 and
September 2018 respectively, as well as sales from new launches in
Austria, Sweden, Denmark and Iceland.
The roll-out of Alkindi(R) has been impacted to a small degree
by the unpredictability of timeliness of pricing discussions, which
are conducted on a country-by-country basis, by activities required
to prepare for the UK's departure from the EU (including the
establishment of a subsidiary company within the EU and securing
the required licenses and authorisations) and the impact of the
Falsified Medicines Directive, which requires each pack of
pharmaceuticals to have a unique identifying code. Nevertheless,
the Group expects further country launches in 2020 that will
continue to provide strong revenue growth for Alkindi(R) .
Gross margin for the Period was 74% (H1 2018/19: 82%). The
overall gross margin is impacted by the mix of sales by country, in
particular for the Nordic region where Diurnal shares revenue with
its distribution partner, Frost Pharma, and by dose strength. As
Alkindi(R) sales volumes grow, the Group expects to be able to
realise margin improvements through manufacturing efficiencies.
Additionally, Diurnal has implemented several measures with its
manufacturing partners to further reduce the cost of goods.
Operating expenses
R&D expenditure for the Period was GBP2.4m (H1 2018/19:
GBP6.4m). During the prior period, R&D expenditure was
increased significantly as the Group undertook activities to
initiate a Chronocort(R) US Phase 3 trial in CAH and a US Phase 2
trial in AI; following the Chronocort(R) European Phase 3 trial
read-out in October 2018, these US clinical studies were put on
hold, in order to re-assess the study designs. In addition, the
prior period included costs of completion of the Chronocort(R)
Phase 3 registration trial in Europe and the transition of patients
completing this study into the ongoing European long-term follow-on
study. Reflecting this reduced clinical development activity,
R&D expenses reduced significantly in the Period.
In order to provide better information on the financial impact
of the continued build out of Diurnal's European commercial
infrastructure to support Alkindi(R) and the potential future
launch of Chronocort(R) , selling and distribution expenses have
been split out from administrative expenses. Figures for the six
months ended 31 December 2018 and the year ended 30 June 2019 have
also been split out, to provide useful comparative information.
Selling and distribution expenses, comprising the costs of the
Group's sales and marketing, medical liaison and supply chain
activities, were GBP2.0m (H1 2018/19: GBP2.5m). The prior period
included significant expenditure relating to market access
activities required to secure pricing for Alkindi(R) in Europe. In
addition, following the Chronocort(R) European Phase 3 trial
read-out in October 2018, a number of cost-saving measures were
implemented towards the end of the prior period, including a
restructuring of the commercial team engaged by Ashfield
Healthcare.
Administrative expenses as reported for the Period were GBP1.1m
(H1 2018/19: GBP0.9m). The reported administrative expenses in both
the current Period and prior period have been impacted by several
large items, as follows:
Unaudited Unaudited Unaudited
6 months 6 months 12 months
ended ended ended
31 Dec 2019 31 Dec 2018 30 Jun 2019
GBP000 GBP000 GBP000
Administrative expenses as reported (1,054) (872) (2,150)
Less: change in accrual for
employers National Insurance
on unexercised share options (73) (607) (572)
Less: exchange gain on settlement (362) - -
of US dollar commitments relating
to US Chronocort(R) studies
------------ ------------ ------------
Underlying administrative expenses (1,489) (1,479) (2,722)
------------ ------------ ------------
Expenses in the Period reflected a credit of GBP0.1m (H1
2018/19: credit of GBP0.6m) relating to the provision for
Employers' National Insurance contribution on share option
exercises; the large credit in the prior period reflects the fall
in the share price following the announcement of the Chronocort(R)
Phase 3 clinical trial headline data in October 2018. The current
Period includes a foreign exchange gain of GBP0.4m relating to the
settlement of US dollar commitments relating to the Chronocort(R)
US clinical studies. Underlying administrative expenses after
adjusting for the above items of GBP1.5m (H1 2018/19: GBP1.5m),
were at a similar level to the prior period.
Operating loss
Operating loss for the Period decreased to GBP4.6m (H1 2018/198:
GBP9.7m), reflecting the increased revenues and lower overall
operating expenses, as outlined above.
Financial income and expense
Financial income in the Period was GBP34k (H1 2018/19: GBP73k);
during the prior period, the Group held a substantial portion of
its treasury deposits in US Dollars, in order to hedge the costs of
the planned US clinical studies, which attracted a significantly
higher interest rate than the Group's Sterling deposits. Financial
expense for the Period of GBP3k largely reflects the adoption by
the Group of IFRS 16, which requires the capitalisation of future
operating lease payments and the subsequent expensing of a notional
interest charge. Further detailed in Note 4.
Loss on ordinary activities before tax
Loss before tax for the Period was GBP4.5m (H1 2018/19:
GBP9.6m).
Tax
The current year includes an estimate of the R&D tax credit
attributable to the six months ended 31 December 2019. 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 4.7 pence (H1 2018/19: 13.4 pence),
reflecting the increased revenues and lower operating expenses
outlined above.
Cash flow
Net cash used in operating activities during the Period was
GBP5.0m (H1 2018/19: GBP10.5m), driven by the increased Alkindi(R)
revenues and lower operating expenses during the Period, partly
offset by increases in Alkindi(R) inventory, to support the
continued commercial roll out in Europe.
Balance sheet
Total assets decreased to GBP9.6m (31 December 2018: GBP12.1m),
primarily reflecting the operating cash outflow in the Period. Cash
and cash equivalents at 31 December 2019 were GBP4.6m (31 December
2018: GBP6.9m). Total liabilities decreased to GBP2.1m (31 December
2018: GBP2.9m), reflecting the timing of payment of certain
clinical trial expenses relating to the Chronocort(R) US
development in the prior period. Net assets were GBP7.4m (31
December 2018: GBP9.2m).
Financial outlook
Diurnal expects its cash resources to last until at least into
Q3 2020 based upon current planned expenditure. As highlighted in
the Operational Review, the Group is encouraged by US interest in
its late-stage pipeline, which provides an opportunity to generate
non-dilutive income, including potential for signature fees,
milestone payments and development cost funding. Diurnal is also
assessing opportunities for both equity and non-equity financing,
in order to further extend its cash resources.
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 2019, 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 2019
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2019 2018 2019
Note GBP000 GBP000 GBP000
Revenue 1,147 186 1,044
Cost of sales (303) (33) (224)
---------- ---------- ----------
Gross profit 844 153 820
Research and development
expenditure (2,388) (6,400) (8,690)
Selling and distribution
expenses (1,977) (2,546) (4,506)
Administrative expenses (1,054) (872) (2,150)
Operating loss (4,575) (9,665) (14,526)
Net financial income 31 73 130
Loss before tax (4,544) (9,592) (14,396)
Taxation 7 509 1,383 2,108
Loss for the period (4,035) (8,209) (12,288)
---------- ---------- ----------
Basic and diluted loss per
share (pence per share) 6 (4.7) (13.4) (19.7)
---------- ---------- ----------
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 2019
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2019 2018 2019
GBP000 GBP000 GBP000
Loss for the period and
total comprehensive loss
for the period (4,035) (8,209) (12,288)
---------- ---------- ----------
The Notes form part of this condensed financial information.
Consolidated balance sheet
as at 31 December 2019
Unaudited Unaudited Audited
As at As at As at
31 Dec 31 Dec 30 Jun
2019 2018 2019
Note GBP000 GBP000 GBP000
Non-current assets
Intangible assets 61 31 49
Property, plant and equipment 8 83 41 33
144 72 82
---------- ---------- ---------
Current assets
Inventories 764 259 672
Research and development
tax credit claims receivable 2,614 3,659 2,105
Trade and other receivables 9 1,410 1,208 1,457
Cash and cash equivalents 4,625 6,863 9,147
9,413 11,989 13,381
---------- ---------- ---------
Total assets 9,557 12,061 13,463
---------- ---------- ---------
Current liabilities
Trade and other payables 10 (2,109) (2,908) (2,503)
(2,109) (2,908) (2,503)
---------- ---------- ---------
Non-current liabilities
Trade and other payables 10 (15) - (16)
(15) - -
---------- ---------- ---------
Total liabilities (2,124) (2,908) (2,519)
---------- ---------- ---------
Net assets 7,433 9,153 10,944
---------- ---------- ---------
Equity
Share capital 4,327 3,086 4,226
Share premium 42,149 37,800 42,153
Group reconstruction reserve (2,943) (2,943) (2,943)
Accumulated losses (36,100) (28,790) (32,492)
Total equity 7,433 9,153 10,944
---------- ---------- ---------
The Notes form part of this condensed financial information.
Consolidated statement of changes in equity
for the six months ended 31 December 2019
Unaudited Unaudited Unaudited Unaudited Unaudited
Share Share Group reconstruction Accumulated
capital premium reserve losses Total
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 30
June 2018 3,067 37,769 (2,943) (21,012) 16,881
Loss for the period
and total comprehensive
loss for the period - - - (8,209) (8,209)
---------- ---------- --------------------- ------------ ----------
Equity settled
share-based payment
transactions - - - 442 442
Issue of shares
for cash 19 42 - (11) 50
Costs charged
against share
premium - (11) - - (11)
Total transactions
with owners recorded
directly in equity 19 31 - 431 481
Balance at 31
December 2018 3,086 37,800 (2,943) (28,790) 9,153
Loss for the period
and total comprehensive
loss for the period - - - (4,079) (4,079)
---------- ---------- --------------------- ------------ ----------
Equity settled
share-based payment
transactions - - - 383 383
Issue of shares
for cash 1,140 4,748 - (6) 5,882
Costs charged
against share
premium - (395) - - (395)
Total transactions
with owners recorded
directly in equity 1,140 4,353 - 377 5,870
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 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 2019
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2019 2018 2019
GBP000 GBP000 GBP000
Cash flows from operating activities
Loss for the period (4,035) (8,209) (12,288)
Adjustments for:
Depreciation, amortisation and
impairment 39 10 22
Share-based payment 427 430 825
Net foreign exchange (gain)/loss (352) (79) (10)
Financial income (34) (73) (130)
Finance expenses 3 - -
Taxation (509) (1,383) (2,108)
(Increase) in inventories (92) (135) (549)
Decrease in trade and other receivables 47 1,660 1,361
(Decrease) in trade and other
payables (451) (2,753) (3,143)
Cash used in operations (4,957) (10,532) (16,020)
Interest paid - - -
Tax received - - 2,279
Net cash used in operating activities (4,957) (10,532) (13,741)
---------- ---------- ----------
Cash flows from investing activities
Additions of property, plant
and equipment (3) (24) (25)
Capitalisation of research and
development expenditure (16) (17) (37)
Interest received 34 73 130
Net cash from investing activities 15 32 68
---------- ---------- ----------
Cash flows from financing activities
Net proceeds from issue of share
capital 97 - 5,526
Repayment of lease liabilities (29) - -
---------- ---------- ----------
Net cash from financing activities 68 - 9,890
---------- ---------- ----------
Net (decrease)/increase in cash
and cash equivalents (4,874) (10,500) (8,147)
Cash and cash equivalents at
the start of the period 9,147 17,284 17,284
Effects of exchange rate changes
on cash and cash equivalents 352 79 10
Cash and cash equivalents at
the end of the period 4,625 6,863 9,147
---------- ---------- ----------
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 2019, 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 2019 and for the six months ended
31 December 2018 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 2019
have been extracted from the audited statutory accounts which were
approved by the Board of Directors on 23 September 2019 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, though it did
include a reference to a matter to which the auditor drew attention
by way of emphasis without qualifying their report in relation to
going concern.
3 Going concern
For the Period ended 31 December 2019, the Group made an
operating loss of GBP4.6m on revenues of GBP1.1m and used net cash
in operating activities of GBP5.0m. Cash and cash equivalents at 31
December 2019 were GBP4.6m.
The Directors have considered the funding requirements of the
Group for a period of 12 months from the date of approval of this
report. In June 2019 the Group completed a GBP5.9m fundraising;
under current business plans the Group's cash resources will extend
to Q3 2020. Based on this, additional funding is expected to be
required by the end of Q2 2020 to support the Group's going concern
status.
The Directors have a reasonable expectation that the Group will
be able to raise further financing, which could come from a variety
of sources, to support its ongoing development and
commercialisation activities. The Directors also have a reasonable
expectation that the Group will be able to generate significant
funding through entering into strategic collaborations for the
development and commercialisation of its late-stage pipeline
outside of Europe. However, there can be no guarantee that the
Group will be able to raise sufficient funding from existing and
new investors, nor that the Group will be able to secure strategic
collaborations for its late-stage pipeline. Dependent upon the
funds raised, and the level of income generated from licensing
activities, further funding may be required to reach
profitability.
Based on the above factors the Directors believe that it remains
appropriate to prepare the financial statements on a going concern
basis. However, the above factors give rise to a material
uncertainty which may cast significant doubt on the Group's and the
Company'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 Accounting policies
These consolidated interim financial statements for the six
months ended 31 December 2019 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 2019 and expected to be adopted in the
financial year ending 30 June 2020. Where new IFRS standards
amendments or interpretations became effective in the six months to
the 31 December 2019, there has been no material impact on the net
assets or results of the Group.
IFRS 16 'Leases': IFRS 16 was issued in January 2016. Under the
new standard, an asset (that is, the right to use the leased item)
and a financial liability to pay rentals are recognised. The only
exceptions are short-term and low-value leases. Adoption of IFRS 16
from 1 July 2019 has resulted in the Group recording an initial
lease liability for its lease commitments of GBP83k as well as a
corresponding right of use asset of GBP83k; the adoption
methodology of IFRS 16 is the cumulative catch-up method, and the
impact is not material with an adjustment to opening retained
earnings of less than GBP1k. Further disclosure will be provided as
part of the notes to the year-end financial statements.
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
previously presented financial information based upon the following
segmentation:
-- Alkindi(R) - development and supply of the Group's Alkindi(R) product
-- Chronocort(R) - development of the Group's Chronocort(R) product
-- Central and early-stage - all other activities, including
development of the Group's early-stage pipeline products
In light of the common supply chain, commercial infrastructure
and prescribing audience, the Group now 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.
The revenue analysis below is based on the country of
registration of the fee-paying party:
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec
2019 2018 30 Jun 2019
GBP000 GBP000 GBP000
Europe 1,147 186 1,044
The Group's customers are wholesalers in the markets in which it
has launched Alkindi(R) , namely the UK and Germany. An analysis of
revenue 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
2019 2018 30 Jun 2019
GBP000 GBP000 GBP000
Customer A 457 26 300
Customer B 395 - 291
Customer C 63 - 151
Customer D 56 100 137
Customer E 44 60 134
Other customers 132 - 31
---------- ---------- ------------
1,147 186 1,044
---------- ---------- ------------
6 Loss per share
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2019 2018 2019
Loss for the period (GBP000) (4,035) (8,209) (12,288)
Weighted average number of shares
(000) 86,366 61,430 62,390
Basic and diluted loss per share
(pence per share) (4.7) (13.4) (20.0)
---------- ---------- ----------
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
2019 2018 2019
GBP000 GBP000 GBP000
Current tax:
- UK corporation tax on losses - - -
of period
- Research and development tax
credit receivable for the current
period (495) (1,380) (2,105)
- Prior period adjustment in respect
of research and development tax
credit (14) (3) (3)
Deferred tax:
- Origination and reversal of temporary - - -
differences
Tax on loss on ordinary activities (509) (1,383) (2,108)
---------- ---------- ----------
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 2019 was finalised at GBP2,120k and submitted to HMRC during
the Period.
8 Property, plant and equipment
Unaudited Unaudited Audited
31 Dec 31 Dec 30 Jun
2019 2018 2019
GBP000 GBP000 GBP000
Cost
Opening balance 77 52 53
Recognition of right of use assets 83 - -
(see Note 4)
Additions 3 24 25
Disposals - (1) (1)
Closing balance 163 75 77
---------- ---------- --------
Depreciation
Opening balance 44 27 27
Charge for the period 36 8 18
Disposals - (1) (1)
---------- ---------- --------
Closing balance 80 34 44
---------- ---------- --------
Net book value
At start of period 33 25 26
---------- ---------- --------
At end of period 83 41 33
---------- ---------- --------
9 Trade and other receivables
Unaudited Unaudited Audited
As at As at As at
31 Dec 31 Dec 30 Jun
2019 2018 2019
GBP000 GBP000 GBP000
Trade receivables 525 109 510
VAT recoverable 241 510 219
Prepayments 644 531 482
Other debtors - 58 246
1,410 1,208 1,457
---------- ---------- --------
10 Trade and other payables
Unaudited Unaudited Audited
As at As at As at
31 Dec 31 Dec 30 Jun
2019 2018 2019
GBP000 GBP000 GBP000
Current liabilities
Trade payables 1,096 1,191 1,145
Other payables 39 27 37
Lease liabilities 56 - -
Other tax and social security 93 106 82
Accrued expenses 825 1,584 1,255
2,109 2,908 2,519
---------- ---------- --------
Non-current liabilities
Lease liabilities 1 - -
Accrued expenses 14 - 16
---------- ---------- --------
15 - 16
---------- ---------- --------
The Group accrues for employer National Insurance contributions
that may become due on unexercised share-based payments that are
not HMRC tax-advantaged. In the current Period GBP14k of the
accrual has been classified as a non-current liability. The
comparative amount of GBP5k has not been reclassified as the amount
is not considered material.
11 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 year:
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2019 2018 2019
GBP000 GBP000 GBP000
Purchase of goods and services
IP Group plc and subsidiaries 14 14 29
Recharges between group companies
Charges from Diurnal Group plc
to Diurnal Limited 347 153 513
Charges from Diurnal Europe B.V.
plc to Diurnal Limited 87 30 82
448 197 624
---------- ---------- ----------
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.
12 Events after the reporting date
On 10 January 2020, Diurnal issued a total of 1,214,660 par
value options over ordinary shares of 5 pence in the Company under
the Diurnal Group plc Long Term Incentive Plan.
Date of Preparation: February 2020 Code: CORP-GB-0048
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.
END
IR KKKBQCBKDNBD
(END) Dow Jones Newswires
February 11, 2020 02:00 ET (07:00 GMT)
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