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brain in hands

Neurocrine Biosciences sells a drug that has reached blockbuster status, but the company is also working to expand its portfolio and manufacturing. Now there’s a deal to buy a small biotech that’s ramping up its presence in neuroendocrinology.

Neurocrine agreed to pay £48.3 million in cash (about $56.5 million) to acquires Diurnal Group, a Cardiff, Wales-based company that specializes in chronic endocrine disorders, specifically those resulting from deficiencies in the hormones cortisol and testosterone. Under the financial terms announced on Tuesday, Neurocrine will pay 27.5 pence for each Diurnal share. This price is a 151% premium to Diurnal’s average closing price over the past three months. The deal still needs approval from Diurnal shareholders.

Dirurnal has launched two hydrocortisone products: Akindi treats pediatric adrenal insufficiency, while Efmody is approved for the treatment of congenital adrenal hyperplasia (CAH) in adolescents and adults. For the fiscal year ending June 30, 2021, Diurnal reported £4.3m in revenue from these products.

The pipeline includes product candidates in various stages of development for adrenal insufficiency, classic 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 can take advantage of the available resources of a larger, well-capitalized company. In announcing the deal, Anders Härfstrand, Diurnal’s non-executive chairman, said the deal was good for shareholders given the risks of helping commercialize the company’s drugs while conducting key clinical trials. Raising money for that effort by selling more stock would significantly dilute shareholders’ holdings, he added. Meanwhile, Neurocrine executives see the Diurnal deal as complementary.

“We’ve followed Diurnal for several years and respect its people,” said Kyle Gano, Neurocrine’s chief business development and strategy officer, in the acquisition announcement. “We see a good strategic fit that offers benefits to both the companies’ stakeholders and the physician and patient communities we both serve.”

San Diego-based Neurocrine is already pursuing CAH. The small molecule Neurocrine is an oral medicine 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 trials are underway testing crinecerfont, one in adult patients with CAH and the other in children and adolescents who have the hormone disorder. Preliminary data for both is expected in 2023.

Neurocrine’s first commercialized product, Ingrezza, was FDA approved in 2017 to treat tardive dyskinesia, a neurological disorder that causes involuntary muscle movements. The drug crossed the threshold for blockbuster status last year, reporting revenue of $1.1 billion, an 8.9% increase over sales in 2020. In the first half of 2022, the drug generated $652.2 million in sales, nearly 32% increase compared to the same period last year. The company also offers a Parkinson’s disease drug, Ongentys.

Neurocrine boosted its portfolio last November by paying Sosei Heptares $100 million upfront for rights to preclinical and clinical stage neuroscience assets, the most advanced of which is a potential treatment for schizophrenia. Neurocrine’s most advanced drug candidate is valbenazine, which is being evaluated in separate Phase 3 trials for tardive dyskinesia and chorea, a symptom of involuntary muscle movements in Huntington’s disease.

Photo: Matthew Horwood, Getty Images

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