Dear shareholders, friends,
Both from a professional viewpoint and as
largest private holder, I have felt the urge to share my uncensored
mind on the disproportionate decline in CLINUVEL’s value.
Naturally, I experience chagrin as a substantial
shareholder, but in earnest I am more concerned and engaged with
the many of you who had invested 12 to 17 years ago, speculating
that the Company would sustain a $2B plus valuation throughout 2022
given its financial strength to date.
For the benefit of the 2.5% recently joined
shareholders, I distinguish CLINUVEL’s genesis through a few
sections, and address the all-important issue of timing.
Early yearsA new business plan
was required for a company nearing insolvency in October 2005.
Operating at a cost of capital of 14% to 16%, we financed the
project mostly across two equity rounds at nearly $62 million.
Directors had not agreed on prospective earnings as too much
R&D uncertainty loomed. At the time, pharmaceutical executives
on the Board, surrounded by their advisors, ran internal analyses
consigned to multiple commercial scenarios: all valuations came out
considerably lower than today’s.
Middle yearsFrom 2010 to 2016,
limited equity placements totalled $28 million at premium to
market, a significant departure from common practice, but
underpinning our position that CUV had been trading at discounted
value. All shareholders have benefited from our decision to step
away from the pattern of serial equity issuances at a discount to
market. In parallel, we cut pharma expenditures to a minimum, while
advancing SCENESSE® (afamelanotide 16mg) to market.
The regulatory pathway was equally novel and at
times fraught with significant, yet calculated, risk. The gain of
our managers overcoming the challenges was calculated as an
indelible value to the Company in taking this experience forward to
new medicinal therapies for future growth.
Recent yearsThe final chapter
of the trilogy enumerated a commercial expansion. Contrary to
industry habits, we established teams focused on distribution,
market access, and pricing. Fast forward some years, pricing
negotiations played out well in the majority of countries, whereby
the Company reached profitability during the first year of
commercially distributing SCENESSE® (2016/17). As predicted some
countries would resist any agreement on pharmaceutical pricing
proposed, arguing allocation of resources towards other
therapies.
Our strategy aims for organic and inorganic
growth. The house is building a pipeline of melanocortin molecules
and new formulations. As a logical nexus to our photoprotective
injectable SCENESSE®, we set out to develop a series of topical
(leave on) products serving to protect and assist DNA damaged skin
inflicted by solar radiation.
We work with a number of investment banks and
brokers through well-defined acquisition targets for the accretive
match.
TimeNaturally, time translates
to value in our sector and there is a definitive answer as to how
long it will take to see the final diversified construct.
In navigating the fuselage, I would be bitterly
disappointed in not seeing all plans realised within the term of my
final employment contract, ending July 2025.
Four years ago we made public our objectives to
be achieved by end of 2023, and our staff is aligned in attaining
the majority of these. Save for good health, if our global ensemble
continues to work the odd hours in fulfilling a once-in-a-lifetime
opportunity, then realisation should be within reach. For having
entered a knowledge economy, specialised professionals matter most,
hence much effort is put in retaining them.
Lest we forget, we have witnessed the eruption
of the chrysalis maturing to a financial stronghold, giving us
corporate choices. By staying the course, we eliminate the
perennial investors’ concern that innovators are unable to survive
the consequences of unexpected market conditions.
As bitterly cold winds blow, CLINUVEL fortifies
it financial fur, and as current sentiments ebb, the overall
strategy may well be recognised.
ConclusionIf the recent
healthcare indexes - NBI and XHJ – are of any reference, one sees
higher volatility across the underlying listed stocks. As the NBI
reached a high of over 5,400 in September 2021, it has retreated to
a level around 3,850 at present, a loss approximating 30%.
Uncoincidentally, on 23 September CUV reached an all-time high of
$43.58 to come off to current levels, a stronger decline but very
much following the biotech trend worldwide. In essence, we see a
temporary flight from perceived high-risk sectors and theme stocks,
as CLINUVEL is currently characterised, to blue chip safer
havens.
Our challenge remains to identify and attract
new institutional shareholders, willing to invest longer-term as
opposed to those who enter and exit positions short-term. Gauging
from our interaction with a number of US and EU specialised funds,
I cannot help but be confident that we will succeed in this mission
too.
As to you long-term holders, testing times force
us to reflect on the original investment decision, and our hope for
future markets and market value. It is certain that many more
challenges will befall CLINUVEL during its odyssey, however I
experienced that there is an intangible – but real – value embedded
in the resilience of a focussed team.
I have long regarded the daily mark to market
glance at 1600 hours as a distraction, and in so far daily
operations and labour towards our construct matter, market
sentiments or even euphoria neither rocks the boat nor alter our
objectives.
As eight to nine year cycles wash over us, my
teams will come through this nadir too, for we had prepared
CLINUVEL precisely for these events and corrections occurring. I
leave you with a parable, in reminding that the Company could
equally have been in a development phase facing clinical or
regulatory setbacks, holding little cash at hand under current
market conditions. We incessantly worked to escape the what-ifs,
and so we have.
During a recent visit to Disraeli’s residence at
Hughenden Manor, in absorbing his speech to the House of Parliament
in 1834, I could not help to think about your vehicle: “I have
brought myself, by long meditation to the conviction that a human
being with a settled purpose must accomplish it, and that nothing
can resist a will which will stake even existence upon its
fulfillment.”
Keep your composure at times when it matters,
thank you.
Yours sincerely,
Philippe Wolgen
Managing DirectorCLINUVEL PHARMACEUTICALS
LTD
About CLINUVEL PHARMACEUTICALS
LIMITED
CLINUVEL (ASX: CUV; ADR LEVEL 1: CLVLY; XETRA-DAX: UR9) is a
global specialty pharmaceutical group focused on developing and
commercialising treatments for patients with genetic, metabolic,
systemic, and life-threatening, acute disorders, as well as
healthcare solutions for the general population. As pioneers in
photomedicine and the family of melanocortin peptides, CLINUVEL’s
research and development has led to innovative treatments for
patient populations with a clinical need for systemic
photoprotection, DNA repair, repigmentation and acute or
life-threatening conditions who lack alternatives.
CLINUVEL’s lead therapy, SCENESSE® (afamelanotide 16mg), is
approved for commercial distribution in Europe, the USA, Israel and
Australia as the world’s first systemic photoprotective drug for
the prevention of phototoxicity (anaphylactoid reactions and burns)
in adult patients with erythropoietic protoporphyria (EPP).
Headquartered in Melbourne, Australia, CLINUVEL has operations in
Europe, Singapore and the USA. For more information, please go to
https://www.clinuvel.com.
SCENESSE®, PRÉNUMBRA®, and NEURACTHEL® are registered trademarks
of CLINUVEL.
Head of Investor Relations Mr
Malcolm Bull, CLINUVEL PHARMACEUTICALS LTD
Investor Enquiries
https://www.clinuvel.com/investors/contact-us
Forward-Looking Statements
This release contains forward-looking
statements, which reflect the current beliefs and expectations of
CLINUVEL’s management. Statements may involve a number of known and
unknown risks that could cause our future results, performance or
achievements to differ significantly from those expressed or
implied by such forward-looking statements. Important factors that
could cause or contribute to such differences include risks
relating to: our ability to develop and commercialise
pharmaceutical products; the COVID-19 pandemic and/or other world,
regional or national events affecting the supply chain for a
protracted period of time, including our ability to develop,
manufacture, market and sell biopharmaceutical products;
competition for our products, especially SCENESSE® (afamelanotide
16mg), PRÉNUMBRA® or NEURACTHEL®; our ability to achieve expected
safety and efficacy results in a timely manner through our
innovative R&D efforts; the effectiveness of our patents and
other protections for innovative products, particularly in view of
national and regional variations in patent laws; our potential
exposure to product liability claims to the extent not covered by
insurance; increased government scrutiny in either Australia, the
U.S., Europe, Israel, China and Japan of our agreements with third
parties and suppliers; our exposure to currency fluctuations and
restrictions as well as credit risks; the effects of reforms in
healthcare regulation and pharmaceutical pricing and reimbursement;
that the Company may incur unexpected delays in the outsourced
manufacturing of SCENESSE®, PRÉNUMBRA® or NEURACTHEL® which may
lead to it being unable to supply its commercial markets and/or
clinical trial programs; any failures to comply with any government
payment system (i.e. Medicare) reporting and payment obligations;
uncertainties surrounding the legislative and regulatory pathways
for the registration and approval of biotechnology and consumer
based products; decisions by regulatory authorities regarding
approval of our products as well as their decisions regarding label
claims; our ability to retain or attract key personnel and
managerial talent; the impact of broader change within the
pharmaceutical industry and related industries; potential changes
to tax liabilities or legislation; environmental risks; and other
factors that have been discussed in our 2021 Annual Report.
Forward-looking statements speak only as of the date on which they
are made, and the Company undertakes no obligation, outside of
those required under applicable laws or relevant listing rules of
the Australian Securities Exchange, to update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise. More information on preliminary and
uncertain forecasts and estimates is available on request, whereby
it is stated that past performance is not an indicator of future
performance.
www.clinuvel.com
Level
11 535
Bourke
Street Melbourne
- Victoria, Australia, 3000T +61 3 9660
4900F +61 3 9660 4999
Clinuvel Pharmaceuticals (TG:UR9)
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Clinuvel Pharmaceuticals (TG:UR9)
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