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Research: Healthcare
Diurnal has announced that it has agreed to an acquisition by Neurocrine Biosciences (US-based biopharmaceutical player) for a cash consideration of £48.3m or 27.5p per share. The proposed acquisition consideration is a c 144% premium to the closing price of 11.25p on 26 August. Although the acquisition is subject to shareholder approval by both companies, the transaction is likely to close by late October or early November. Neurocrine is also focused on the endocrine space (in addition to neurology) and anticipates synergies from the combination of the two businesses. It intends to continue pursuing Diurnal’s current R&D programmes in the UK and maintaining existing business operations. At the time of publication, Diurnal’s shares are trading c 130% higher than at close on the day before the announcement.
Written by
Diurnal Group |
Proposed acquisition by Neurocrine Biosciences |
Acquisition update |
Pharma and biotech |
31 August 2022 |
Share price performance
Business description
Analysts
Diurnal Group is a research client of Edison Investment Research Limited |
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Diurnal has announced that it has agreed to an acquisition by Neurocrine Biosciences (US-based biopharmaceutical player) for a cash consideration of £48.3m or 27.5p per share. The proposed acquisition consideration is a c 144% premium to the closing price of 11.25p on 26 August. Although the acquisition is subject to shareholder approval by both companies, the transaction is likely to close by late October or early November. Neurocrine is also focused on the endocrine space (in addition to neurology) and anticipates synergies from the combination of the two businesses. It intends to continue pursuing Diurnal’s current R&D programmes in the UK and maintaining existing business operations. At the time of publication, Diurnal’s shares are trading c 130% higher than at close on the day before the announcement.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield (%) |
06/20 |
6.3 |
(5.1) |
(4.1) |
0.0 |
N/A |
N/A |
06/21 |
4.4 |
(11.1) |
(7.0) |
0.0 |
N/A |
N/A |
06/22 |
4.7 |
N/A |
N/A |
N/A |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
According to the announced acquisition terms, Neurocrine will acquire all of Diurnal’s outstanding and yet-to-be issued shares for a cash consideration of £48.3m or 27.5p per share. The acquisition is anticipated to take place through the scheme of arrangement under Part 26 of the Companies Act and will require a court meeting and a general meeting to be held in October 2022. The acquisition needs to be approved by at least 75% of scheme shareholders at the court meeting, followed by approval by at least 75% of Diurnal’s shareholders at the general meeting. To date, Neurocrine has received irrevocable undertakings with respect to 54.8% of Diurnal shares to vote in favour of the scheme at the court meeting and the resolutions to be proposed at the general meeting.
As a reminder, Diurnal has two commercial-stage products: Alkindi (hydrocortisone formulation to treat paediatric adrenal insufficiency, AI) and Efmody (hydrocortisone formulation for adults and adolescents with congenital adrenal hyperplasia). While Alkindi is approved and commercialised in Europe and the US, Efmody was launched in Europe in 2021. Diurnal also has two ongoing clinical trials: the CONnECT study (expand Efmody treatment to additional territories like the US and Japan) and the CHAMPAIN study (a line extension study for the treatment of AI in adults in Europe). Diurnal is also developing a DITEST study (DNL-0300, oral testosterone therapy for the treatment of male hypogonadism).
Like many smaller biotech companies, Diurnal has been facing liquidity and funding pressures, particularly after the Scottish Medicines Consortium’s decision not to recommend Efmody for automatic reimbursement in Scotland (by the NHS in March 2022.
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