Neurocrine Biosciences sells a drug that has reached blockbuster 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.
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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 program in the pipeline is DNL-0200, a modified-release hydrocortisone product 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, San Diego-based Neurocrine frames the Diurnal deal as complementary. In a regulatory filing, the company said that the transaction gives Neurocrine clinical development and commercial capabilities in the U.K.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
“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.”
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.
[Story updated to add the following two paragraphs with analyst comment.] In a note sent to investors Tuesday afternoon, William Blair analyst Myles Minter wrote that the Diurnal acquisition offers synergies with crinecerfont in advance of forthcoming clinical data.
“EU geographies have unique challenges in reimbursement, and we believe that the Diurnal acquisition not only can bring personnel with this experience on board, but also give Neurocrine the ability to expedite CAH patient identification in these geographies,” Minter said.
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, 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. Ingrezza may offer additional growth opportunity outside of tardive dyskinesia. The drug is also in late-stage development for treating chorea, an involuntary muscle movement symptom of Huntington’s disease.
Photo: Matthew Horwood, Getty Images
