Dear Shareholders
The business relationship with hospitals and medical centres, our customers, is a central element that has been the constant to the Group’s progress. The direct distribution model maintained both in Europe and the United States continued to provide benefits in terms of just-in-time distribution and consistency of supply terms, while direct interface with healthcare customers lay the foundation for future markets we aim to establish.
I must acknowledge the resourcefulness, tenacity, and exceptional efforts of our team, held together by a drive and passion to succeed in uncertain macro environments. The past year, we enhanced our capacity and capabilities, and realised significant growth of personnel. The Group remained on course with a clear growth strategy to become a specialist in the development and use of melanocortins. The Group’s strengthened balance sheet indicates that we are well positioned to create further longer-term value for our shareholders.
However, most revealing has been that more patients, and an increasing number of centres, have gained access to SCENESSE®, whereby demand for ongoing treatment remained a key parameter we monitored. We managed to train more medical centres and healthcare providers, providing direct access to drug to our patients, shortening travel time. Feedback from prescribers remained excellent, both on ease of administration of the drug product, efficacy, and safety. In working towards one clinical goal of making medical innovation available, I wish all patients and their families a symptom-free existence enjoying full physical and psychological freedom.
CLINUVEL’s future is crystal clear as we are establishing a melanocortin specialty group, based on a core pharmaceutical and a branch into PhotoCosmetics, a specialised consumer market. Our research & development spans three pharmaceutical products (SCENESSE®, PRÉNUMBRA® Instant, and NEURACTHEL® Instant), two formulations (controlled-release, immediate release) to be administered in at least five diseases, and three product lines to consumer markets, specialising in PhotoCosmetics (CYACÊLLE, DNA-assisted repair, MSH-response). As the Group increases in size and functions, the aim is to make each of the new divisions profitable on their own merits, as products and services are added.
At the beginning of the year, we increased the US team, lending assistance to patients who had difficulty in overcoming the administrative burden imposed by their insurers. Since many erythropoietic protoporphyria (EPP) patients frequently turn to us for help in wading through necessary paperwork as a requirement to obtain insurance cover under their existing plan, our teams steer them such that physicians in turn are properly set-up to apply for treatment under Prior Authorization. The Assistance Program in the US has supported US patients in gaining access to a life-altering treatment.
Equally in Europe, we saw a rise in patient numbers, frequency of drug doses, and new centres being trained. In both continents, and without exception, prescribers are enthused about the drug since their patients benefit from their effective care. At each bimonthly visit, patients, partners, and families give a detailed description of newly found lives, of the ability to participate in daily activities which had been unimaginable. Concurrently, from data obtained we see that the distribution of EPP patients shows a skewness, whereby the pool of longer-term treated patients, between 10 and 15 years, increases year on year. I have particular sympathy for our group of patients, who have literally lived in the dark for the majority of their existence. Facilitating “a full life in the light” for patients is a reward to our entire team, it is the kind of motivation to keep doing what we set out to.
All in all, clinical expansion and increased demand led to a better than anticipated result of 24% increase in global revenues. Tracking annual orders for SCENESSE®, we continued to see US prescribers placing orders during the winter months. In contrast to the belief of payors, porphyria patients need outdoors protection all year round, as the use of the drug in real world conditions has shown, since light source exposure (including the visible spectrum) will trigger phototoxic reactions. Therefore, coverage during winter months appears necessary.
Profits before tax grew by 33%, while net profits after tax by 47%, results far exceeding our expectations, and beating consensus. The Group remained debt free. Net assets increased by 31% while cash reserves rose by 29%.
In keeping with our own projections shared in 2021 of expenses up to A$175 million over 5 years, we steadily and deliberately increased the rate of reinvestments year on year. For the year, overall expenses increased by 15%, while capital expenditures were made towards facilities at the Singapore RDI Centre. Resources have been made available towards new talent, clinical studies, drug product and research activities.
Among many new staff, I mention the addition of several engineers, a talented medically trained manager, the Group’s first in-house lawyer, new financial staff, a new head of scientific affairs, scientific staff, and an assistant to investor relations in Europe. The Group grew by 19% over the past 12 months, facing difficult labour markets.
Under guidance of Drs Wright and Bilbao, clinical progress was made in the XP-DNA repair program, where first human biopsy results showed novel and promising results. We started a variegate porphyria program, evaluating the effects of afamelanotide in a group of patients with a different variant of porphyria but akin to EPP, but who suffer from high degrees of skin fragility, seen as incapacitating wounds and blisters triggered by light exposure.
With PRÉNUMBRA® Instant, we entered the second afamelanotide product in clinical trials, part of deliberate life cycle management. As we obtained good results from the first clinical trial in ischaemic stroke (CUV801), we introduced this product in a further study (CUV803) exposing mild to moderate, and moderate to severe stroke patients. Our pharmacovigilance team reviewed the first data on safe use of the product, the prerequisite of CLINUVEL’s ongoing success, and we are enthused by the clinical reports on the patients.
The scientific team led by Chief Scientific Officer (CSO), Dr Wright and Dr Rizzitelli progressed the manufacturing of NEURACTHEL® Instant, the ACTH product, adding to our suite of melanocortins. Under Good Manufacturing Practices, we manufacture NEURACTHEL® batches for use in a clinical setting.
The backstop was provided by Dr Hamila and her quality and pharmacovigilance team, ensuring that each porphyria patient worldwide was followed up and data captured in a global registry.
Further advancements were made in formulation development at VALLAURIX, our Singaporean facilities, and the first pilot batch of our test product CYACÊLLE, a polychromatic screen, was released on 1st March. Feedback was obtained before engaging in scaled-up commercial manufacturing of a chosen formulation. Aiming to serve high risk populations, we start to realise the ambition to establish a PhotoCosmetic market.
The CBM team grew in number and quality with Mrs Arrom Bibiloni heading the division, providing guidance on global branding and marketing activities for the years to come. While Investor Relations is a separate discipline, we harmonised our communications strategy such that similar messages and news flow to various stakeholders would be ensured; Mr Bull continued the efforts to address domestic and international investors, joined by Mrs Hardy.
The overall responsibility of the global operations was well handled by Mr Hay, while local operations were presided by Mrs Colucci and Dr Teng.
Direction. Often, I am asked to provide more colour on the future of CLINUVEL, its direction and expectations. On various occasions, I have expressed our strategy to build a sustainable and diversified group, containing multiple divisions and attracting diverse skills, turning CLINUVEL into an independent firm. Actually, answers as to the chosen path are found in facts and history, while business execution is multi-pronged and planned for the long haul. Our approach is not axiomatic, but one which has been contemplated for more than a decade of analyses, and one that is within the realm of possibility. It is also apparent that CLINUVEL will be the world’s first to launch a PhotoCosmetics product range based on melanocortins.
The prospect of building a house from the brink of bankruptcy to the status of being able to withstand the challenges of time is exciting; many of us see this business case unfolding as a once-in-a-lifetime opportunity, one created out of a unique long-term strategy. What was once a dream has gradually turned into reality.
Let’s go back to the start. Mass demand for melanocortins was provoked from 1980 onwards, and markets started to realise the potential to chemically activate skin pigmentation by injection. Various attempts by venture capitalists and pharmaceutical executives failed, which led to the Company facing insolvency in 2005. The rest is known.
Nevertheless, insistence for melanogenesis, humans’ unique defence mechanism to solar radiation, remained high among the widest imaginable audiences, individual and professional investors, banks, and consumers. However, the only strategy to exhaust a regulatory authorisation for afamelanotide – the first systemic photoprotective drug worldwide – and create value had been via a pharmaceutical program spanning nearly two decades of Phase I, II and III trials. We religiously followed a plan based on compelling technology, while preparing for the second part of the business to unfold.
There always remained the realisation that melanocortins, expressed both in brain and skin, actually share neuroendocrine end targets, in simpler terms both organs showing similar cellular responses to these hormones. Logically, our CSO, Dr Wright and technical staff followed a course of developing melanocortins for brain diseases (acute stoke), as well as metabolic afflictions characterised by severe light intolerance, phototoxicity, such as seen in porphyria, and depigmentation – called vitiligo.
Vision. We had long formed the vision to make melanocortins available for broader populations, aiding the repair of DNA-skin damage provoked by UV. Data obtained earlier in the programs drove us to sequentially execute a complex strategy. Besides, the use of melanocortins as a DNA protective agent had always remained a talking point for those seeking bronzing without UV damage. To be able to ‘close the scientific loop’, we all too well understood that safety of melanocortins used systemically would be the requisite for its later translation into PhotoCosmetic products, hence our decades-long public emphasis on safety, vigilance, and analyses, all pre-empting our greater plans. Regulatory authorities required confirmation from abundant data sets to quell their anxiety about the safety of melanocortins. We are nearing the moment of silencing any longer-term concern of safety with more than 14,500 doses of SCENESSE® administered, and patients followed-up for 17 consecutive years.
A successful establishment of a cosmetic business within a core pharmaceutical one is unconventional, but in our case makes much sense to progress. Therefore, as a first step, we explored and engaged marketing consultants, advertising agencies, branding and creative professionals, marketers and came to the conclusion that the unique PhotoCosmetic products would be better served by an in-house team of professionals coming from the luxury goods sector, as well as experts in digital analytics. In 2021, we started to form the Communications, Branding & Marketing (CBM) team in anticipation of the launch of PhotoCosmetics. In the year past, we attracted our preferred head of creative, professionals in digital marketing, branding, and social media managers, as well commercial and marketing specialists with a background in cosmetics.
XP-DNA damage repair and skin cancer prevention. It is beyond question that from all factors contributing to skin cancers and melanoma, solar radiation is a dominant one. The absence of photodamage will seldom lead to any of the dermal cancers, hence our mission to innovate in this area. Melanocortins have long been shown to optimise the cellular signals needed to effectively protect against UV-radiation, and enhancing these signals gave us the ability to commercially launch the first melanocortin afamelanotide as a systemic photoprotectant.
The unravelling of the puzzle came as it was discovered that enhancement of cellular signalling in skin tissues led to assistance in DNA reparative processes following UV radiation. To effectively protect against solar damage, effective processes are needed to mobilise complementation factors to recognise, excise and replace DNA-damaged fragments. Melanocortins assist in these processes, and our clinical studies in xeroderma pigmentosum and healthy controls aim to demonstrate the magnitude of the role of these peptides.
The origin of photodamage is found in the formation of chemical bonds distorting DNA strands, and replication of defective nucleotides increases the risk of skin cancers. This is even more problematic in the highest risk populations, XP patients, who develop multiple skin cancers per year due to the lack of DNA-reparative processes.
Our teams are evaluating the extent of benefit melanocortins provide to these XP patients, the percentage reduction of CPDs. In the past year, we shared the first results of CUV156, and most recently from CUV151 in healthy volunteers.
Vitiligo. The North American and European market for vitiligo opened-up with the introduction of the first topical drug in July 2022, while US Food and Drug Administration (FDA) had made a u-turn change in its views in March 2021. Since then, we have answered the FDA’s request to conduct a small trial using afamelanotide as monotherapy (CUV104), while we prepare a larger vitiligo trial using the optimum combination of narrowband UVB and afamelanotide. We had already shown the supremacy of the combination therapy in 2014 (CUV102) and it had always been clear that this combination would provide pigment thrust for thrust for those who had lost skin colour. It has taken years of debate with regulatory authorities for their representatives to understand the effect of vitiligo on patients with darker skin complexion, and after they had come around the necessity to prioritise these patients, CLINUVEL’s pathway unfolded. The CUV105 trial will be the largest held with 150 vitiligo patients to be recruited.
Brain disorders. A further arm of our pharmaceutical program is the use of melanocortins in brain disorders. Since these hormones are expressed both in skin and brain, the function of melanocortins in neuroprotection is one long described by various research groups, spanning decades. Our first neuro-program targets an unaddressed population of stroke patients, those who are ineligible to receive clot dissolution and clot removal therapy. The results from study CUV801 were published during the past 12 months. These results provided the signal to advance the program to CUV803, currently ongoing.
For diversification of the stroke program, we developed a second afamelanotide formulation in PRÉNUMBRA® Instant, giving physicians the option to increase acute doses. The results of CUV803 will ultimately determine the design of a larger randomised clinical trial in stroke. The ability to assist patients who suffered a stroke is a privilege and summarises our quest to develop novel solutions.
PhotoCosmetics. The ability to translate pharmaceutical technologies to consumer products is in itself a rare opportunity, but one that beckons from the specialty in melanocortins. Peptide technology enables one to enter galenic research to arrive at user-friendly products. However, many obstacles lay ahead to even contemplate entry into consumer markets. The main one was human safety of melanocortins. Here, we left no stone unturned, and comprehensive analyses from 14,500 doses of SCENESSE®, and longer-term monitoring of patients gave us the comfort in 2021 that regulatory authorities would no longer be able to object to wider use. Since then, we have focused on the advancement of the product lines containing melanocortins serving populations in highest need of skin repair and protection.
With the two M-lines, we expect to change the way we think and speak about solar damage, regeneration, and DNA-assisted repair. We also intend to rewrite the notion of MSH-response following UV exposure, as melanocortin-containing formulations aim to accelerate the bronzing effect, melanisation of the skin to reduce and prevent solar damage. In essence, we are closing the circle, we are delivering on an expectation that came with the birth of melanocortins, as these had first been introduced in 1980.
The circle came in three parts. Our pharmaceutical programs in photo-induced diseases, patients characterised by absolute light-intolerance, such as porphyria (EPP), showed the ability to provide photoprotection. Second, clinical trials in XP and healthy controls gave the scope to show reduction in photoproducts, cyclobutane pyrimidine dimers (CPDs). Last, the vitiligo trials (depigmentation), demonstrated our ability to use melanocortins to repigment skin when exposed to UV-radiation. This triptych is being translated in parallel in three PhotoCosmetic lines, one P-line and two M-lines. The P-line offers new products providing polychromatic (multiple wavelengths) protection under extreme conditions, while the M-Lines contain the melanocortins. The pilot launch of CYACÊLLE started on 1st March this year.
As far as our research has uncovered, there is no other pharmaceutical company which has endeavoured to translate its pharmaceutical programs from core technology into consumer focused products. However, being first and novel has never daunted our teams, someone has to do it. For this, we need a professional team solely focussed on preparing global digital campaigns to give visibility to our cause, preventing photodamage and skin cancers in using melanocortins and thorough education.
Future expansion. The near-term goals are to advance manufacturing of NEURACTHEL® Instant, complete the marketing programs for PhotoCosmetics, and expand through an acquisition. In the short-term, we will initiate manufacturing plans, bringing in-house capacity to manufacture the next generation of products. We aim for all our divisions, pharmaceuticals, healthcare solutions, and manufacturing to become profitable in time. For this to occur, during the next period we will further invest in R&D facilities, new formulation development at scale, and capital equipment such that our research efforts be accelerated.
The clock is running to complete an ambitious program, since I wish to see through the launch of several products before the end of my engagement with CLINUVEL in 2025. My immediate goals are aligned with the rest of our staff, and these are defined as launching two new pharmaceuticals PRÉNUMBRA® Instant, NEURACTHEL® Instant and a PhotoCosmetic range of three product lines. Thereby, our Board’s objectives are to establish a strong, independent group versed in many disciplines, and one standing out in its management of personnel and intercompany culture.
I place most emphasis on the true assets of this Group, its people and therefore the longer-term careers we can offer. Although we are doing well in this respect, it will improve to such standards that CLINUVEL will position itself in the market as an academy, able to outperform its peers in retention and attraction of unique talent, and career development.
At the beginning of the calendar year, we shared our enthusiasm for the months ahead, and while we tend not to provide financial guidance, there are no immediate reasons why CLINUVEL would not continue to grow at its current pace. In staying with our own projections, we certainly prepare ourselves for this by putting in place infrastructure and new systems, to spur further growth. We plan for increase of staff in all disciplines, back-office, finance, clinical, regulatory, investor relations, quality, research, CBM, and business development; positions across all functions will be added to the Group to a level of 120 over the next 12 months.
In the next 12 months, we foresee that organic growth will be complemented by acquisition(s) with an aim to turn these cash neutral the first year. It is quite clear that to succeed in these ambitions, we need discipline and focus across the Group. Guidelines and policies and clear operating procedures are maintained while we expand at high pace.
Against the ongoing successes, there are a number of business domains we are turning our attention to, such that we can say next year at the same time that we master not a number but all disciplines of the decathlon.
My appreciation goes to all our physicians in Europe, Switzerland, Israel and North-America for their devoted attention to patients, and the independent analysts of CLINUVEL – Dr Stanton and Mrs Thomson at Jefferies Australia, Mrs Mann at MA Moelis Australia, Dr Benson, Dr Storey and Ms Williams at Wilsons Advisory, and last, but not least, the Bioshares team led by Mark Pachacz – for their efforts and long hours of work put to analyse CLINUVEL.
Managing Director
CLINUVEL Group