Diurnal’s £30M Fund Raising Success and AIM Listing

Biotech and Money had the opportunity to speak to Martin Whitaker CEO of Diurnal about Diurnal’s £30M fund raising and AIM listing. Martin has overall responsibility for delivering the Group’s commercial objectives and joined the Group in January 2008, supporting Fusion’s investment. Martin has over 18 years’ experience in the pharmaceutical industry and has led the Diurnal team to progress the Company’s lead products, Chronocort® and Infacort®, into pivotal Phase III clinical trials.

B&M: Perhaps we could start by understanding the strengths and focus of Diurnal Group?

MW: Diurnal is focused on developing high quality products in the endocrine space. We develop hormone based products for chronic diseases. Our ambition is to become a world leading company in that area by starting off with one or two endocrine diseases, and then broadening those out into a whole range of other products for patients with unmet needs.

B&M: What is it that sets your company apart? What is it that’s different about what you’re developing?

MW: Most people think of diabetes when they think of endocrinology. There is a huge market for insulin-related products, over 50 billion dollars per annum, and that’s where big pharma has traditionally focused all its e orts.

Beyond diabetes, however, there is a multitude of chronic diseases requiring lifelong treatment. There has been less investment in these historically, and patients have been left without treatment options, with important health consequences. This area is where Diurnal is really focusing its efforts.

In particular, we are targeting the adrenal gland, the gonads, the pituitary, and the thyroid. This market is worth more than $11 billion per annum.

B&M: Would you agree this is not a completely novel approach, but the mechanism you use is what sets you apart from competitors?

MW: Yes. The ethos of the company is about really understanding patient needs and then addressing those unmet needs with an appropriate drug delivery product.

That is our unique selling point. Everything we do starts with the patient and ends with the patient. Once we understand the patient need, we can choose whatever technology we wish to use to develop a product through to market. Our ambition is to go beyond product approval, but also to commercialise our own products as well.

B&M: Can you tell us more about the two late-stage clinical candidates in your portfolio?

MW: We have two late stage products aimed at tackling cortisol deciency – Infacort and Chronocort. Infacort and Chronocort treat two rare diseases. One is congenital adrenal hyperplasia, and the other is adrenal insufficiency (hypopituitarism or Addison’s Disease). Both result in the patient not being able to produce the hormone cortisol, which is an essential metabolic hormone. Infacort targets paediatric patients and Chronocort targets adult patients.

Infacort has started a phase 3 programme in Europe. That’s progressing very well and will finish this year. Chronocort is about to begin a phase 3 programme in Europe. The US programmes will follow on about a year behind.

B&M: So it’s a global market you’re approaching – first European approval and then US.

MW: Yes. The diseases we are targeting are prevalent right across the world. We will start off in Europe, then progress to the US. Beyond that the aim is to market the products worldwide.

B&M: Are there any short term milestones coming up on the lead candidate you’d like to share?

MW: With Infacort, the short term milestone is to complete our phase 3 study this year. We will submit for market authorisation in Europe in late 2016. Hopefully we will have approval 12 months after that, so at the end of 2017. We will then be able to generate the first revenues from early 2018 onwards. Chronocort should follow on shortly behind.

B&M: What’s going to help you achieve those clinical approvals? Obviously it’s clinical progress, but also financing and funding. You successfully listed on AIM in December last year, raising approximately £30 million. It was also a time when two of the notable UK biotechs pulled their listing. So, in an environment where market conditions were starting to wane, how did you convince investors to support you?

MW: Diurnal has a unique position here in the UK. We have two late stage products, and were seeking funding to take those through to completion of clinical trials, registration, and then commercialisation. Most companies IPO at a much earlier stage, in phase 1 or 2. We had already overcome those hurdles by the time we came to IPO.

The second thing in our favour is we have long standing and supporting investors in IP Group and Finance Wales that were able to cornerstone the investment for us. Therefore, we already had a significant portion of that £30 million from existing investors. So we’re starting in a strong position, despite what the market conditions were doing.

IA: The last few years have been good for British Biotech life science IPO’s, but challenging towards the latter half of last year so it was great to have that cornerstone investment. We were then able to bring in Invesco, and the combined support from the three investors was hugely important in our IPO.

B&M: What is your take on the current market conditions? AdaptImmune at its height was over a billion and a half, and now down to about 500 or 600 million. Does that worry you?

IA: It’s volatile. There are different types of investors who either like it or hate it. IPO are classically about timing. That was on the Board’s agenda over the course of last year. With hindsight, we chose the right time.

MW: New investors came on board because we had long-term existing investors and a long-term, late-stage story. We have seen short-term volatility over the past few months, but the value of Diurnal will ultimately be determined by whether we hit our key milestones – market authorisation of our products, and then making the jump from development company to commercial company, generating revenues from those products both in Europe and in the US.

B&M: How would you describe the first couple of months since the IPO? Have things changed dramatically?

MW: In terms of our development programmes, this is a process and timescale set down by the regulators, so these activities have carried on as normal.

The IPO will make a difference in enabling us to complete those programmes, but it’s too early to say what the long-term impact would be. We wanted the IPO to broaden the shareholder base, which it did. This gives us more exibility and more options for future fundraising once we have our first products approved.

B&M: What strategic opportunities exist for Diurnal? What kinds of partnerships are you going to make in the next 2 years?

MW: We know our products intimately which have been developed to treat a very clear, defined unmet clinical patient need. We also have advantages around orphan drug designation which means a strong exclusivity position to supplement our patent portfolio.

First we need to achieve market authorisation of our lead products. Thereafter, the ambition is to broaden the product portfolio. We also have an early stage product portfolio, which includes an exciting new testosterone product coming into the clinic this year. We are also going to progress Tri4Combi, a treatment for hypothyroidism, to get that close to clinic this year.

We do come across opportunities in the wider endocrine space, and we carefully evaluate their merits in each case. There is definitely an opportunity to accelerate our commercial ambitions. As long as it ts in our area of expertise, we would be happy to add to our existing portfolio.

B&M: We interviewed Jim Phillips of Midatech last year, who was brave enough to put a figure on that level of ambition for his business. He mentioned a 3 billion dollar valuation. Do you have a figure in mind as to your ultimate level of ambition for Diurnal?

MW: It’s certainly too early to comment on a 3 billion figure, but the ambition is to become the world’s leading endocrine company. Those are multi-billion dollar market opportunities. Once we’ve progressed our first product to market and are generating revenues, there is a real opportunity for Diurnal to expand into other endocrine areas.

B&M: What will be your major aims in the coming 12 months or so?

MW: We have key milestones to hit over the next 12 months. But it’s also about understanding patient needs. We are in regular contact with patient advocacy groups and charities, so that we can we sure our products will provide a holistic solution for patients.

Working in this orphan drug area affords us this opportunity, because we’re very close to patients. In areas such as diabetes, a pharmaceutical company may be quite far removed from patients.

IA: The commercial side will be an interesting challenge as well. The typical model of the UK biotech sector is to develop a product and sell the asset. We have ambitions beyond that. We will transition from being a small UK company to embrace the world, starting off with Europe and the US, and through the process to achieve all the required pricing and reimbursement arrangements in different countries.

The first steps have been taken this year with the recruitment of the core of the commercial team. We’ve been able to recruit people with from larger pharmaceutical companies with direct and relevant experience.

B&M: You’ve obviously got a strong management team and board. You have also brought in a lot of specialist input from the field of endocrinology to help you achieve your aims.

MW: That’s right. We have a number of endocrinologists, including our CSO, Professor Richard Ross, founder of the company. We’ve recently recruited the core of our commercial team. Part of that team is an experienced industry paediatric endocrinologist, Dr John Porter, again bringing a wide range of expertise in the paediatric and commercial areas.

B&M: It’s interesting you say many UK companies look for that exit rather than build it out. Why do you think the UK industry is more in favour of exit rather than building the scale of the business like you see in the US?

IA: Probably a variety of reasons. Good science will end up appealing to people with deep pockets, and those pockets tend to be overseas. And then there’s that concept of making the jump from academia and research into the commercial world. The stereotype is that the US is more focused on the commercial than the UK.

MW: We have some great research going on in the UK, like at the Crick Centre in St Pancras and at the various universities. That tends to be early stage activity. The next stage in UK company development will be pushing through these ideas to a marketed product.

With Diurnal, choosing a niche area affords us the chance to be one of the first to do that. There aren’t too many people who have done that before in the UK. Shire is probably the best known example, starting off with a small specialist product, taking it to market, and growing by acquisition over the years.

That’s exactly the model we are using. Endocrinology is a specialist area. To commercialise your own product isn’t right for every company. For us we though it’s the right thing. We know who our prescribers are. They’re concentrated around specialist hospital centres in the UK, Europe and US. That therefore gives us an opportunity to target those specialist centres with a very modest sales force, very similar to the model Shire used in the early days.

With rare diseases, the patient and prescribing community is quite small. We’re in contact with the clinicians who treat the patients. A lot are coming to us asking how trials are progressing, wanting to take part in clinical trials.

We are well known in the endocrine space and we believe people will give us the opportunity to commercialise these products.

B&M: I guess the orphan market itself is taking a bit of a lead from the US at the moment, with support from Martin Shkreli and Hilary Clinton. Does your pipeline purely exist in the orphan designation area?

IA: No we very much see ourselves as the endocrinology company. We are starting off with an orphan disease, and one we know very well, but we have a broader pipeline looking at diseases such as hypogonadism (testosterone de ciency) and hypothyroidism (thyroid hormone deficiency), which is a very common endocrine disease, more prevalent particularly in older women. These are both large chronic endocrine diseases rather than orphan diseases.

B&M: What’s keeping you both awake at night at the moment? It could be a challenge or an opportunity.

IA: There is so much going on at the moment. We’ve come out of the back of a very heavy Q4 in terms of the IPO project.

There’s plenty to keep us busy, and certainly keeping me busy in terms of trying to get that company transitioned into all the process and procedures that a newly listed company needs.

So if the brain is buzzing, it’s buzzing with all the things we need to do, rather than what we haven’t done. I’m sleeping well.

MW: With regards to our product development moving into com- mercial, there’s nothing keeping me awake at night. We have a
very experienced management team that has taken many products through to market already. I think one of the key strengths of Diurnal is we’ve recruited the core commercial team already, so that’s well ahead of schedule. So we’re now setting down our plans for a commercial piece well ahead of most companies probably would be doing. We are going out, speaking to key opinion leaders, seeing how the market lies, and really developing the strategy as to how to tackle these markets.

For me it’s an exciting year ahead. We can make those plans on the commercial side work and that will coincide with us completing our clinical trials and launching our first product.

Martin Whitaker has overall responsibility for delivering the Group’s commercial objectives and joined the Group in January 2008, supporting Fusion’s investment. Martin has over 18 years’ experience in the pharmaceutical industry and has led the Diurnal team to progress the Company’s lead products, Chronocort® and Infacort®, into pivotal Phase III clinical trials.

Diurnal is a specialty pharmaceutical company dedicated to developing high-quality hormone therapeutics to aid lifelong treatment for rare and chronic endocrine conditions, including Congenital Adrenal Hyperplasia, Adrenal Insufficiency, Hypogonadism and Hypothyroidism. The company has a strong, multi-skilled entrepreneurial management team with extensive pharmaceutical product development experience in endocrinology.

Tags :

Leave a comment