Success in biopharmaceuticals involves exploring unchartered territories while working out an attitude to risk. It is a balancing act that requires a team with a certain disposition who have a clear philosophy to follow. Our core technology has been fined-tuned over the space of 43 years. To put our industry in context, in that time three companies have abandoned their attempts to clinically develop melanocortin technology.
That is to say, our scientists, physicians and managers have faced daunting challenges in their efforts to turn chemical novelty into economic reality. And yet, they have achieved that goal. Today, CLINUVEL is comprised of a global team that works cohesively across seven locations. These individuals devote their time and energy to build a profitable group that solves healthcare problems, while striving to become a global brand. That is the mission we have set ourselves and which we have an unwavering commitment to fulfil. Now to the future: how and when to propel the Company towards the next phase of growth and valuation?
One of our core beliefs is that many minds working together will solve problems related to melanocortin technologies more quickly. Technology is subordinate to the calibre of staff. My main priority has been to position CLINUVEL among the handful of biopharmaceutical companies that are financially independent. Less than 9% of such firms make money and we are one of them. Unfettered by fundraising constraints, we have increased the pace of development of treatments for vitiligo, DNA repair, stroke, porphyrias, Parkinson’s disease and other healthcare products. We have achieved our primary goal, which was ensuring that both patients and early investors benefit from these actions. Now we find ourselves in the secondary stage of financing this project, as this letter explains. I will share the rationale behind our approach to finance, development and expansion over the last 12 months.
Unexpectedly, this period has been overshadowed by the tragic loss in August of our esteemed colleague and a dedicated supporter of CLINUVEL, Professor Marcus Maurer, Chair of the Dermatology Department at Berlin’s renowned Charité University Hospital. I would like to pay tribute to Marcus, taking the moment to express my longstanding admiration for a person who was larger-than-life, optimistic, light-hearted and always stood above the matter. I only wish I had done this during his lifetime.
Marcus was one of the first physicians I contacted back in 2004, as part of lengthy diligence on CLINUVEL (at the time, Epitan). Marcus immediately understood the potential of SCENESSE® in treating EPP and various photodermatoses. He accompanied our managers to Germany’s BfArM, the European Medicines Agency, and reimbursement authorities (GBA, GKV), and spoke about afamelanotide at numerous conferences. Not only was Marcus one of the most ethical professionals one could meet, but he also radiated charisma and demonstrated an innate compassion for patients and staff alike. He was, he is, a luminous being.
One very occasionally meets someone who makes an immediate impact, leaves an indelible impression and whose energy makes collaborating joyful and exciting. Marcus was this very person. He leaves behind his partner and three children, and his departure from this world leaves us with an ineffable void. Our clinical research with Charité must continue in his name, that is the way Marcus had wanted it. CLINUVEL’s work will stand on his shoulders, a giant in dermatology.
The past year reminded us once again of the steep development and financial risks posed by the relatively high number of Complete Response Letters issued by the FDA, as well as the many drugs that leading insurance companies rejected, owing to concerns about new molecular entities (NMEs). It is worth noting that developing and commercialising novel hormones for untreated diseases—as CLINUVEL has chosen to do—is a much riskier endeavour than it is for biosimilars, radiopharmaceuticals, generics, diagnostics, devices and managed care.
All medical technologies and services developed by listed life-science companies will eventually be collated in a life-science index. On closer inspection however, these distinct businesses are incomparable in such a pared-back format, owing to their differing objectives and risk profiles. Dotmatics, an analysis firm that aggregates biochemical and clinical data, recently revealed that the costs of drug development have surpassed US$1.5 billion over the last decade. Meanwhile regulatory and commercial success rates remain steady, at less than 10%. Higher spending does not guarantee fixed results.
I felt strongly that CLINUVEL, as a leading specialist in developing NMEs, needed to be insulated from operational and financial risks, particularly given increased volatility in global markets. Managing the Company’s development in a conventional manner, with less focus to funding requirements and by diversifying its pipeline early on, would have left CLINUVEL dependent on equity investors or debt financing. We estimate this would have diluted shareholders’ ownership of CLINUVEL by more than 1,600% (assuming we would have secured funding at all).
So, we took a different path. Once management and majority shareholders agreed to aim for economic sovereignty, we focused our resources on limiting drug development and set out to self-distribute our lead product, SCENESSE®. Thanks to this strategy, CLINUVEL’s financial metrics have strengthened year-on-year. Our robust balance-sheet has enabled us to seize promising growth opportunities by developing our portfolio of melanocortin technologies and pursing new ventures which will result in new revenue streams.
In parallel to our attention to risk, we have sought operational efficiencies. We first set annual agendas, aligning all parts of the business and establishing key performance indicators for staff. These included working in cross-functional teams to cross-pollinate expertise; assigning regional responsibilities; and integrating research & development and innovation output. Over the last year, we rolled out a multi-weighted model to guide clinical and regulatory decision-making. The aim was to provide our managers with a blueprint to secure efficacy and commercial viability of new drug candidates. The model aims to save considerable sums by avoiding costly clinical and regulatory programmes which do not meet the commercial criteria down the line. New systems will be added in 2025 too. ERP¹, CRM² systems, eQMS³ and intelligence platforms will ensure that data and information are readily available across the Group.
At CLINUVEL, we all understand the need to deliver results and meet deadlines. Those who embrace the Group culture, being enthusiastic and motivated to solve problems, build a meaningful career. At the same time, we are swimming against tides in the post-pandemic labour market. Recruitment agencies such as Randstad report up to a 30% turnover in pharmaceuticals, a number that raises concerns about the retention of key knowledge.
To combat this trend, we are on a perpetual search for the next generation of technical and business talent. The Group continually conducts interviews to identify promising candidates and shape positions to suit the brightest individuals. To increase retention and incentives for long careers at the Company, we established the CLINUVEL Academy in 2024. The initiative offers eligible managers a structured training program, post-graduate education, and advanced learning opportunities, in return for long-term service.
For the last decade, our financial planning has been centred around establishing a Group that remains at the vanguard of pharmaceutical development, giving shape to the next set of melanocortin technologies. To make this a reality, we came up with a business model in which longer-term development would be self-financed. Now with our melanocortin portfolio (SCENESSE®, PRÉNUMBRA®, NEURACTHEL®) and the PhotoCosmetics ranges (CYACÊLLE® and CYACÊLLE® RADIANT), we are on the cusp of translating peptide technologies to help a host of rare or untreated diseases; realising a future of new delivery methods; and reformulating our technology to suit consumer healthcare.
We are embracing novel thinking on financial systems, distribution networks, artificial intelligence, branding activities, social media, broader ambassadors’ communication and ERP, distribution, and market access. We are preparing the Company to integrate new skills in engineering, bio-analytics, and formulation development, while also diversifying our offering and markets by targeting both pharmaceutical and consumer healthcare.
Over the last year, we have increased the number of trained and accredited North American Specialty Centres from 67 to 87 (with two now active in Canada), in anticipation of entering the North American vitiligo market. We aim to add another 33 such centres by the end of 2025. These centres will prescribe SCENESSE®, according to the conditions of the drug’s use for vitiligo patients who have lost pigmentation in their skin, and in many cases, their identity.
Dr Linda Teng has done a remarkable job of converting sceptical physicians in North America into keen followers and long-term prescribers, thanks to years of persistence by her team. Across the Atlantic, Mrs Antonella Colucci has successfully headed European and Swiss market access, distribution, and logistics. Over 90% of patients continue treatment with SCENESSE® and the therapy is in demand. Patients express high levels of satisfaction and report an improved quality of life, as two new papers illustrate: “Afamelanotide for Treatment of the Protoporphyrias: Impact on Quality of Life and Laboratory Parameters in a US Cohort” from Massachusetts General Hospital; and “Association of quality of life measures with afamelanotide treatment in patients with erythropoietic protoporphyria and x-linked protoporphyria: A retrospective cohort study”, from Henry Ford Hospital in Detroit.
Our patient registry makes these studies possible. It contains uninterrupted follow-up data on patients worldwide which in turn, fuels the growth in the number of centres, prescribers, patients and treatments administered. This makes more doctors and patients aware of the therapy’s long-term benefits.
Against these achievements, how do we measure the eighth consecutive year of growth in earnings, a continuum carefully planned to facilitate our ambitions? We have built up a hefty vault of cash—currently A$183.9m in cash reserves, an increase of 17% the past financial year—and an annual compounded growth rate over seven years of 34%. This enables us to more rapidly able to integrate new technologies and companies. We are always on the lookout for acquisition opportunities when the time is right and when we can sufficiently mitigate integration risk. This would continue the Group’s expansion and subsequent growth of the management team.
New Australian institutions have purchased over 3% in aggregate of CLINUVEL’s shares (CUV) over the last 12 months. Existing institutional investors also increased their holdings over the same period, taking institutional ownership of CUV to 35% of issued capital. Retail stakeholders (including high-net-worth individuals and family offices) also expanded their stake, to 40% of issued capital. We are buoyed by our supporters’ optimism. One high-net-worth investor in the United States recently grew their holdings to one million shares, or 2% of issued capital. Given the ebullient interest in North America, we have recruited our first investor relations manager for this market, Mr Myles Clouston, who is an experienced analytics expert in the life sciences sector.
In October 2023 we welcomed Bell Potter, one of Australia’s largest financial advisory firms, commencing research on the Company for their client base which spans individuals, institutions and corporations. This was followed by Morgans Financial and Morningstar initiating coverage a month later. Mr Malcolm Bull, who leads our Investor Relations (IR) efforts, has attracted six sell-side analysts and acts as the point of liaison with our new Australian institutional investors.
Our consumer-facing communications have also progressed in leaps and bounds. This year we made a first low-cost foray into social media, engaging specialised ambassadors with their own histories of solar damage and skin cancers to raise awareness of the first PhotoCosmetic product CYACÊLLE®. We also recruited our first professional writer, a journalist formerly of The Economist, to create content and opinion pieces for targeted online audiences. A strategic goal remains to deliver articles and engaging, relevant content in digital formats. In the next 24 months, we intend to identify additional influential ambassadors (CUVAs) who can share the CLINUVEL story.
We started the CUVIPs program, engaging intriguing personalities with a public profile and communicating our story with their “followers” in both the virtual and digital worlds. Bringing novel healthcare products to a consumer market requires a long runway. Time and patience are key. Two aims drive our global branding campaign: first, a desire to achieve household name recognition within the next two years. Second, to make CLINUVEL known as a brand synonymous with world-leading innovation in both photomedicine and PhotoCosmetics.
We are focusing on raising brand awareness ahead of the launch of the M1 and M2 lines in 2026, transdermal formulations containing melanocortins. These will be a world first. The Annual Meeting of the American Academy of Dermatology in Orlando next spring presents another opportunity to promote the Company’s industry-defining technologies and bold moves into consumer skincare. We look forward to seeing you there.
One of the year’s digital highlights was the event in February hosted by Ms Stefani Germanotta (whom you may know as Lady Gaga) and Mr Michael Polansky at their home in Los Angeles. At this star-studded, intimate evening we presented CLINUVEL’s pioneering technology and future ambitions to Silicon Valley’s investor community and professionals in the entertainment industry.
The night yielded dazzling results. Content from the evening reached 3.4m people in the days following the event, boosted by Ms Germanotta’s influential profile and mega-influencers such as Ms Dylan Mulvaney. It was proof that a combination of high-profile events, curated social-media campaigns and broader exposure outside pharmaceutical circles will launch CLINUVEL into new, valuable conversations. From here onwards, it is about repetition of messages and having a presence at key global events.
By now, the world has endured seven million deaths from COVID-19 and a total of 776 million confirmed cases, with many more undocumented. Among other things, the pandemic created seismic shifts in working habits. By Q1 2023 we were well adapted to a new reality of Zoom calls at kitchen tables. After this new-found freedom, it was clear that we would not revert to the pre-pandemic norm of five days in the office per week. We posed ourselves two questions: how to maintain productivity and where would work suffer without daily interactions? A year on, we have settled into a new rhythm. Teams working in offices tend to come in two or three times a week, in line with the global average for the post-pandemic workplace. CLINUVEL staff who require a physical laboratory have no option other than to attend full time, however.
I believe that tempting professionals back the office will require employers to rethink their offer to workers. This will entail disrupting the former notion of “office” and presenting an entirely novel concept to staff. Flexibility is essential: commuting outside peak traffic; state-of-the-art facilities that include wellness and meditation rooms; a nursery for children; and cooking facilities. In sum, creating an environment of privilege may incentivise valued staff back to the office. In Britain, we took advantage of a depressed commercial real-estate market to purchase a highly-valued office close to London. Once the refit of our premises is complete, we anticipate that the Britain-based team will reevaluate the inconvenience of leaving home, considering the benefits offered at the new facilities.
Direct investment in research, development and innovation amounts to more than 40% of our net profits. Our Board and senior personnel are acutely aware of the risks associated with innovating melanocortins. And yet, we are confident that it is a gamble worth taking. It would pay off handsomely, in the shape of the competitive position that CLINUVEL would attain at the end of successfully developing a drug for untreated diseases. A case-in-point is the market for porphyria, a new venture that has generated returns on equity of more than 24% on average since we started commercialising.
We have invested resources into the VALLAURIX Singapore team this year, adding new skills, new capital expenditures and new analytical methods with an eye to advancing three pharmaceutical products and the three PhotoCosmetic lines. We are continuously evaluating whether these investments in melanocortin-based technologies increase long-term value, or whether the funds would be more usefully spent elsewhere. Time versus output remains a critical metric of how we assess resource allocation. Thus far, we are compelled to develop the next melanocortin products, serving unmet, lucrative markets.
Finally, in February this year we launched the Photomedicine Foundation, an important, worthy initiative which donates the fruits of R&D to underprivileged communities. African patients with xeroderma pigmentosum will receive treatment and skin-protecting PhotoCosmetics funded by the Foundation. We will focus on patients with darker skin, children and those handicapped by light.
We acknowledge the contributions of Willem Blijdorp, who served nine years as a Board member and four years as Chairman. He gave commercial input at critical moments in CLINUVEL’s history. His business acumen and wider commercial views are missed. I also wish to thank Andrew Likierman for serving during an interim period, and for kindly providing his financial views when they were needed. As this letter goes to print, we are poised to welcome new members who will bring diverse skills to the Board.
Across the Group, our priority is building a team with complementary experience and skills. We are also committed to achieving gender parity and increasing ethnic diversity. Our current ratio of female to male employees is 69:31. We are striving to maintain a minimum of 40% female representation on the Board (the current make-up is 60:40 female:male). Other measures of diversity are detailed in the feature on Sustainability in this Annual Report. At the same time, we are establishing a skills-based organisation where we employ and develop professionals who can meet both current and future objectives. These range from R&D to clinical, analytics, commercial, consumer health, branding and communications.
In the meantime, succession planning for the executive team is progressing well. In July Mr Peter Vaughan replaced Mr Darren Keamy as Chief Financial Officer after 19 years at the Group; and new executives are being added to the team of ten, with Mr Lachlan Hay stepping up to the role of Chief Operations Officer on 1 July. The aim is to appoint a new Chief Executive Officer prior to my departure in June 2026, giving sufficient time for an orderly handover. The Company will continue its trajectory with new management in place by 2026. That presses us to realise all ambitions in less than 24 months.
This past year has been defined by exciting advances, supported by activities to consolidate and realise these strides forwards. CLINUVEL ranks among the few financially independent biopharmaceuticals on a solid growth trajectory. This has attracted numerous new investors to CLINUVEL, drawn by our fundamentals, long-term approach and risk management. To our delight, retail investors in Germany reached more than 1,900 in the past 12 months and their interest in the Company was warmly received during an over-subscribed meeting in Düsseldorf last March. German-speaking countries will receive further investor relations attention in the year ahead.
We are bullish on the outlook for SCENESSE®. The market for the therapy is expanding year-on-year and insurers have already started to reimburse teenagers aged 15 and older. Eventually, we will add the adolescent population to our total pool of patients—a true milestone. With the new talent and specific skills that have entered the Company, we have also begun gearing up to enter the North American vitiligo market. This will reap significant rewards.
The bold combination of pharmaceuticals and healthcare is already lending the Company global exposure. We have laid the foundations for developing, manufacturing and distributing the first PhotoCosmetic products, while preparing for the flagship M-lines. Of course, we remain aware that two distinct businesses compound risks. Yet we possess the funds to take calculated risks, and we are confident in our ability to succeed.
Our leadership continues to evolve, protecting CLINUVEL’s core identity as we innovate. Of the executive team of ten, eight have been with the Company for more than 15 years, and we welcome a new tier of talented senior managers. We have seen the addition of Mr Benson Chao (Legal Counsel), Ms Claire Newstead-Sinclair (Company Secretary), Mr Vaughan (CFO), and the return of Dr Emilie Rodenburger (Director, Global Clinical Affairs). We are pleased to have Mr Clouston join us to build an IR program in the US; and Ms Marga Arrom-Bibiloni to lead the branding activities for the consumer healthcare branch of the business.
There are many new prodigies and emerging stars within the Group. Our task is to design programmes for individuals destined to have a long and rewarding career with us, under the umbrella of the CLINUVEL Academy. I am convinced these investments are worthwhile and that they will pay off in the long-term. I look back at a year where a valuable team carried out quality and pharmacovigilance; regulatory; R&DI; clinical; finance and compliance; investor relations; public relations; a CBM team performed with creative talent; and strong general management.
The avid reader and biopharma investor will also know that CLINUVEL only discloses a fraction of our activities, as it is not in our interest to feed competitors with valuable knowledge. With the bulk of our work below the surface, we look forward to the days when we can reveal our value accretive technologies to enter new markets, protected by intellectual property patents.
The key objective for me now is to fulfil a life’s ambition: to leave behind a prosperous biopharmaceutical company, which houses unique individuals, talents and personalities collectively doing good for those who benefit from our medical innovations. The journey to realising this goal has brought with it humility, shared by all who are associated with CLINUVEL from new Board members to our experienced executive team. This is a robust foundation which we can build upon.
That only leaves me to thank the CLINUVEL team for delivering great financials and you, for staying with us.
Philippe Wolgen
Managing Director
CLINUVEL Group