Diurnal Group - FY21 results reflect puts and takes

Diurnal’s H122 results were hindered by COVID-19 pandemic restrictions muting the benefits from the H2 CY21 Efmody launches in Germany, UK and Austria. Further, the recent Scottish Medicines Consortium (SMC) decision to not recommend Efmody for automatic reimbursement in NHS Scotland poses as a headwind and has caused management to lower revenue guidance. Despite management’s focus on expanding into incremental markets, it now expects that for Efmody to become a profitable franchise, the product will require approval for the treatment of AI (projected in CY24). Hence, the company expects it will require additional funding to reach profitability. Martin Whitaker, CEO and board member, has announced plans to step down immediately. The adverse market sentiment has put significant pressure on shares, which are trading below the cash value. We have placed our valuation and financial forecasts under review.