CEO Letter
Dear shareholders,
On 8 October 2019, CLINUVEL obtained its first and historic US Food and Drug Administration (FDA) approval, some 39 years since the afamelanotide technology was first discovered in a university laboratory. On this day the intraday share price went up briefly to A$45.88, valuing the Company at A$2.2B; we have seen sell offs since that corporate event.
Apart from profit taking by long term investors, we observe that – at the time of writing – 6.91% of the CUV stock is shorted. This is equivalent to 18 days of ASX trading, at the current (5 day) average daily trading volume of 192,266 shares, to cover these positions. Although this percentage has gradually increased in the past weeks, we do not see this market phenomenon as exclusive to CLINUVEL.
Of far more interest is how CLINUVEL enters its final chapter: what are we aiming for and why?
As laid down in the Performance Rights Plan 2019, the stepwise approach to various programs will need to conflate in a portfolio of pharmaceutical and OTC products in the domain of photomedicine. Having obtained the regulatory approval from the FDA, we are now focussing on an R&D program to expand the use of melanocortins in – what we hold as the most exciting part of the melanocortin puzzle – ultraviolet (UV) radiation-induced DNA-repair. For further readings, we point to the various write ups on CLINUVEL’s website, published over the years.
Why is DNA-repair of clinical and commercial relevance? Why is CLINUVEL only now focussing on this domain? These are two of the questions recently posed to us.
First, many have made claims through topical over the counter (“OTC”) and consumer products to enable regeneration or repair of single or double-strands defects in DNA. Unfortunately, little to no scientific proof can be demonstrated as to the effects of these low-concentration non-pharmaceutical products on cellular nuclear response. Our teams have always believed that the systemic route was the most prominent and effective way to induce DNA-reparative effects.
Over the long-term and following chronic exposure to the sun, UV-induced DNA damage leads to photoageing and higher risk of developing skin cancer(s). Certainly, in fair-skinned blue-eyed and blonde individuals with a deficient melanocortin-1 receptor (MC1R) the risk of contracting skin cancers is dramatically higher in their lifetime. A number of co-factors eventually determine whether or not one develops actinic damage, actinic keratoses and, subsequently, squamous cell carcinoma. Another cellular route is followed in the development of basal cell carcinoma, and significantly different in the genesis of melanoma. However, all three prevalent skin cancers mentioned share in common the underlying actinic and DNA damage incurred from UV-exposure and subsequent signature mutations caused.
Data generated by CLINUVEL, together with the scientific work undertaken by leading research institutes, has shown that alpha-melanocyte stimulating hormone (alpha-MSH, the natural hormone of which afamelanotide is a synthetic analogue) optimises MC1R binding, improves cellular signalling and influences UV-generated DNA defects. In the overall cascade of sun-induced erythema (sunburn), of DNA-damage through the formation of photoproducts, the physiologic response, and initiation of reparative processes, there is a strong indication as to a determinative role of alpha-MSH and its analogues for eliciting a beneficial effect in those individuals at risk.
CLINUVEL has had this interest and focus from the start of its program in 2005, however a linear route to proving the thesis was impossible without overcoming FDA’s resistance to the use of melanocortins as a systemic photoprotective.
It is somewhat ironic that the leading regulator had long been most concerned about a hypothesised carcinogenic potential of alpha-MSH analogues, while our teams always had held the opposite view based on scientific data. Diametrically opposing the regulators’ view, we actually identified strong arguments in favour of alpha-MSH analogues in general, including SCENESSE® (afamelanotide 16mg)1 potentially being an anti-carcinogenic agent able to slow down, mitigate actinic damage and assist in DNA-repair.
Now, 14 years later, we are finally executing the ultimate part of the strategic trilogy, having first shown chemically induced systemic repigmentation without UV radiation and followed by the benefits of systemic photoprotection. By evaluating the effects of SCENESSE® as a DNA-reparative agent we aim to complete the three-pronged plan. Although we are once again entering unchartered territory, the prospect is most exhilarating for all involved.
The clinical challenge and the commercial opportunity are both immense, and we are now preparing for two trials. The excitement led our teams to stay together to finalise this part of the strategic trilogy. Nobody at CUV thinks lightly about this endeavour, given some of our managers would have spent half of their professional existence in one company to see this ultimate objective of DNA abrogation being proven. While all of us have choices to leverage past professional performances to other employment opportunities, the CUV team recognises the magnitude and significance of the challenges ahead sufficiently so to undertake and proceed despite all the adversaries encountered along the way.
In seeing an ensemble of professionals who have proven to be resourceful, genuine and able to play along the rules of the game in the industry – yet have differentiated their approach – I have the utmost confidence that they will once again succeed in this final mission of illustrating the ability of SCENESSE® to affect DNA-repair in diseased and non-diseased individuals, those at high risk for actinic damage. The market for these prescriptive and non-prescriptive products should be sufficient to keep everyone around this Company excited and able to withstand momentary volatility in share price.
Philippe Wolgen