Neurocrine Biosciences sells a drug that has reached blockbuster drug status, but the company has also been working to expand its portfolio and pipeline. It now has a deal to buy a small biotech that bolsters its presence in neuroendocrinology disorders.
Neurocrine agreed to pay £48.3 million cash (about $56.5 million) to acquire Diurnal Group, a Cardiff, Wales-based company that specializes in chronic endocrine diseases, in particular those stemming from a deficiency of the hormones cortisol and testosterone. According to financial terms announced Tuesday, Neurocrine will pay 27.5 pence for each share of Diurnal. That price is a 151% premium to Diurnal’s average closing price for the past three months. The deal still needs approval from Diurnal shareholders.
Dirurnal has commercialized two hydrocortisone products: Akindi treats pediatric adrenal insufficiency while Efmody is approved for treating congenital adrenal hyperplasia (CAH) in adolescents and adults. For the fiscal year ending June 30, 2021, Diurnal reported £4.3 million in revenue from those products.
The Diurnal pipeline spans product candidates in various stages of development for adrenal insufficiency, classical hypogonadism, hypothyroidism, and Cushing’s disease. The most advanced product in the pipeline is DNL-0300, a modified-release hydrocortisone that is in Phase 3 testing for CAH. By becoming part of Neurocrine, Diurnal stands to benefit from resources available from a larger, well capitalized company. In the announcement of the deal, Anders Härfstrand, non-executive chairman of Diurnal, said that the deal is a good one for shareholders given the risks of supporting the commercialization of the company’s drugs while also conducting key clinical trials. Raising money for those efforts by selling more stock would substantially dilute the holdings of shareholders, he added. Meanwhile, Neurocrine executives frame the Diurnal deal as complementary.
“We have followed Diurnal for several years and have a high regard for its people,” Kyle Gano, chief business development and strategy officer of Neurocrine, said in the acquisition announcement. “We see a good strategic fit that offers benefits for both companies’ stakeholders and the physician and patient communities we both serve.”
San Diego-based Neurocrine is already pursuing CAH. The Neurocrine small molecule crinecerfont is an oral drug designed to release corticotropin-releasing factor 1 (CRF1), a hormone that acts on a receptor in the pituitary gland to stimulate the release of a different hormone, adrenocorticotropin hormone. Adrenocorticotropin then stimulates the release of cortisol. Separate Phase 3 tests are underway testing crinecerfont, one in adult CAH patients and the other in children and adolescents who have the hormonal disorder. Preliminary data for both are expected in 2023.
Neurocrine’s first commercialized product, Ingrezza, was approved by the FDA in 2017 for treating tardive dyskinesia, a neurological disorder that leads to involuntary muscle movements. The drug crossed the threshold for blockbuster status last year, accounting for $1.1 billion in revenue in, an 8.9% increase over sales in 2020. In the first half of 2022, the drug generated $652.2 million in sales, a nearly 32% increase compared to the same period last year. The company also markets Parkinson’s disease drug Ongentys.
Neurocrine bolstered its portfolio last November, paying Sosei Heptares $100 million up front for rights to preclinical and clinical-stage neuroscience assets, the most advanced of them a potential treatment for schizophrenia. The most advanced Neurocrine drug candidate is valbenazine, which is being evaluated in separate Phase 3 tests for tardive dyskinesia and chorea, an involuntary muscle movement symptom of Huntington’s disease.
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