Chair’s Letter
Dear Shareholders,
Strategy Drives Value
CLINUVEL’s history demonstrates that a long vision will eventually lead to value for society and shareholders. The CLINUVEL Board has long supported an often difficult strategy to reach its goals, and the plan is just starting to unwind as new shareholders are discovering our consistent approach to the business. I am positive that further focus will lead to more growth and results and my task is to see that we can keep and add to our existing team of managers. This is CLINUVEL’s story where many successes and even some setbacks have taken us to present successes.
As Chair, my mandate is to guide the turnaround and viability of the Company, and since the strategic reset from late 2005 our primary focus has shifted to growth and expansion of skills, services and products. As we progressed the Company’s strategy, there were many problems that needed to be solved and many errors that have been avoided. The successful progression of our strategic path required an entrepreneurial mindset, being prepared to take calculated risks to benefit patients and shareholders.
As a Board, we are united by the desire to contribute to society in particular to patients who have an unmet medical need. The commercialisation of the drug over the past five financial years and the track record of the team has driven performance that is enviable amongst life-science companies. The Board have overseen critical decisions taken by a committed team of professionals. Now, we find ourselves again at a decision moment after a difficult but successful year.
An Excellent Financial Year
The financial year ending June 2021 is a record year for total revenues and the achievement of profit under the most demanding COVID conditions. Top revenues of A$48.451 million and profit before tax of A$25.713 million are excellent outcomes and marks the Company’s fifth consecutive year of profit and growth.
During the past financial year, the CLINUVEL team in various locations around the world have had to communicate, co-ordinate and progress their work remotely and worked in scheduled shifts in the laboratories. We saw an increase in the number of EPP patients receiving care and prudently managed our supply chain to meet rising patient demand. We have advanced our research and development initiatives to underpin the diversification and sustainability of the Company for the future. In addition, we have excelled in capital and financial management, maintaining our share capital. We have no debt and have declared the payment of a dividend four years in a row to again show our appreciation of shareholders, particularly those who directly funded the development of the Company over many years.
New Divisions to Support Expanded Operations
We now maintain operations in seven countries. Operations in Australia, the United States, United Kingdom, Switzerland, and Singapore have been enhanced by new operations in Ireland, and following Brexit most recently, Monaco. During the year, we positioned our Company for the future with four divisions:
- Pharmaceuticals, the core of our business;
- Healthcare Solutions, for dermatocosmetic non-prescription products;
- Communications, Branding & Marketing, to communicate our activities and reach new audiences; and
- Manufacturing, to improve our self-reliance.
These Divisions are underpinned by the Singapore based Research, Development & Innovation Centre, commissioned in August 2020 to progress new product development opportunities for the Group.
Pipeline & Development
CLINUVEL has expanded its research and development program over the past year:
- We have commenced a clinical study in acute stroke, specifically arterial ischaemic stroke (AIS), which has a high unmet need;
- The DNA Repair Program is underway with clinical studies in xeroderma pigmentosum (XP) patients set to commence;
- A new topical product is under development to add to our medical product portfolio;
- We continue the development of a formulation of afamelanotide for the treatment of children; and
- PRÉNUMBRA®, a liquid formulation of afamelanotide, is in development.
Incremental Value
Many of us have invested in CLINUVEL because we want to see something good for particular patient groups who have no other medical choice. The pursuit of this objective has resulted in significant incremental value to shareholders over the years and, in many ways, FY2021 has been an important year to commence the next phase of CLINUVEL’s progress.
In staying with a specific strategy, we have seen CLINUVEL’s market performance improve over the years. Shareholder returns based on the change in the CUV share price are impressive.
The increase over the last five years (30 June 2016 to 30 June 2021) in CLINUVEL’s market capitalisation is 645.8%.
To continue this performance, I believe it is critical that we retain the people who have proven their worth in building the business over the years and in continuing to attract new talent. We have increased our staff significantly over the last few years to support the expanding activities of the Group. A very high percentage of our staff become integrated and perform at high standard. Despite some attrition with a demanding workload, we generally select personnel with a positive attitude to winning, consistent with CLINUVEL’s culture. The best talent requires not just a positive environment and inspirational objectives, they also see their remuneration and incentives grow over the years as they contribute meaningfully to the Company’s success.
CLINUVEL has taken a lead in setting incentives at the executive leadership level to encourage entrepreneurship, measured risk taking at highest level, a behaviour close to my heart, and one which, I believe, enables the best and most effective results. I cannot be clearer that the retention of key personnel from the CEO and senior executives, through to personnel of the Company at all levels, is essential for this Company to come through the lows and achieve the highs. The Board, through the Remuneration Committee, which I continue to lead as Chair, have reviewed and improved further the Company’s remuneration arrangements. Together with remuneration consultants and the legal team, we undertake annually analysis of peer groups of comparative companies resulting in the remuneration of executive management detailed in the Remuneration Report.
We also recognise and accept as a Board that the minority voting can influence the direction of the Company with the majority of shareholders not taking the time to vote for resolutions proposed to them. In the worst case, the voting outcome can have an impact on the longevity of management and the stability of the Company. During the year, the Board has supported initiatives to communicate in more varied ways, to reach more shareholders, and to assist a broader understanding of the Company. The Chair’s Letters, issued in November 2020, March 2021, and May 2021, provided insights into the Company’s plans, the role of entrepreneurship and how this links to our approach to executive retention and remuneration. Regular and more detailed News Communiqués were issued on the progress of the Company on its many initiatives, and these continued to be translated to German for shareholders in Switzerland, Austria, and Germany. We also launched new initiatives in public communications during the year to assist general understanding of the Company. We provided shareholders the opportunity to learn about the Company through:
- An Operations Update Webinar hosted by Mr Bull of investor relations, engaging Mr Keamy and Mr Hay on financial and operational issues;
- Strategic Updates I and II with the CEO’s video in the second update attracting much positive comment; and
- A series of video interviews I gave in Amsterdam.
In addition to many meetings and conversations with shareholders, we also made an effort to connect with shareholders who hold their shares through one or more custodians; time will tell how effective this process has been.
Corporate Governance
CLINUVEL Pharmaceuticals Ltd and its Board are committed to establishing and achieving the highest standards of corporate governance. The Company’s Corporate Governance Statement for the year ending 30 June 2021, based on the Australian Securities Exchange Corporate Governance Council’s (ASXCGC) Corporate Governance Principles and Recommendations, 4th Edition, can be found on our website at https://www.clinuvel.com/clinuvel/company-overview/corporate-governance
Vision
As Chair, my role is to oversee the Company and its financial independence. I am very pleased how the CLINUVEL team has consistently driven the progress of our strategy and objectives, and found solutions in situations and times where there were none to be found. We are an innovative company, and more is coming, noting that patience is required in this industry and in the prevailing operating environment. FY2021 has shown the resilience and sustainability of the Company’s operations, and as I said many times the performance of the company is dependent on our managers. The Board is planning for succession of some of our key managers and personnel so that the Company will continue to thrive on from its current basis.
Based on the well performing and growing commercial operations and the potential being built in the R&D pipeline, I am very optimistic for the future of CLINUVEL and the benefit this will confer to all stakeholders, including our valued shareholders.
I thank the leadership and drive of our Managing Director, Dr Wolgen, our CSO Dr Wright and CFO Mr Keamy, and the entire global staff of CLINUVEL for their efforts over the past year. This is also the place to thank the Board of Directors for the work, passion and various insights they have brought the past year to progress the Company.
I look forward with optimism to update you on our progress during FY2022.
