Diurnal raises at least £7m through conditional placing

Speciality pharmaceutical company Diurnal Group announced a conditional placing with institutional investors on Friday, to raise at least £7m before expenses, at a price of 32p per new share.

The AIM-traded firm said the net proceeds would be used to progress the development and commercialisation of its products including to continue the development of the European commercial organisation and roll-out of ‘Alkindi’.

They would also be used to begin market access activities for ‘Chronocort’ in Europe ahead of anticipated approval in the first quarter of 2021, and to strengthen its balance sheet in connection with licensing discussions for ‘Alkindi’ and ‘Chronocort’ in the United States and the rest of the world.

Finally, Diurnal said the proceeds would help it to progress its early-stage pipeline to clinical trials, including proof-of-principle studies and further development of ‘DITEST’, its native oral testosterone formulation.

Based on the board’s current assumptions, which assume both a successful first half 2020 US licencing deal and a successful marketing authorisation in the first quarter of 2021, and the subsequent launch of Chronocort, the net proceeds of the placing were expected to provide funding to profitability for the company's late-stage cortisol replacement franchise.

It noted that the placing price represented a discount of about 4.5% to the mid-market closing price of the company's ordinary sShares on 5 March.

The placing was being conducted by way of an accelerated bookbuilding process, which was to be launched immediately after the announcement on Friday morning.

“Diurnal has delivered against all the key milestones set out at the time of the company's last fundraising, including the continued development of our commercial organisation and roll-out of Alkindi in Europe, as well as regulatory submissions for both Chronocort in Europe and Alkindi in the US,” said chief executive officer Martin Whitaker.

“Funds raised as a result of this proposed Placing will allow us to progress our vision of becoming a world-leading specialty pharma company in endocrinology, in particular through supporting the continued roll-out of Alkindi and commencing market access activities for Chronocort in Europe ahead of its anticipated approval in the first quarter of 2021.”

Whitaker said the bolstering of its balance sheet was also timely as it progressed licensing discussions with potential US partners.

“We also expect the proceeds to provide funding to profitability for the company's late-stage cortisol replacement franchise.”

At 1527 GMT, shares in Diurnal were down 5.97% at 31.5p.