Some good and some weird in that newsletter. Why on earth would they compare recent drops in the CUV shareprice with MSB or SPL? Mesoblast had an FDA rejection which even in the most bullish of markets would cause a massive drop while SPL had a solid drop in revenues and delivers decent losses as has MSB for many years. Neither company delivers impressive and growing profits as CUV does. I also watched the Wolgen interview series in England where he mentions the undervaluation, and why did neither he or the newsletter talk about shorting activity which is rife at Clinuvel? This raises many questions for me. Short selling makes up much of the daily volume with CUV trading and it is all designed to cause a fall in the share price of CUV and it is undoubtedly successful in doing this so why does the company refuse to talk about it but instead makes comparisons to loss making companies. Lets examine some solid evidence from ASIC of the short selling at Clinuvel for just over one month.
On the 28/08/23 open shorts were 3.04% and the share price was $21.14. On the 06/10/23 open shorts were 3.85% and the share price was $14.12.
That 0.81% increase in open shorts equates to about 400,000 fake shares or fake liquidity sold in the market of a lightly traded stock, and sold in a way to cause maximum havoc to the share price. Who else would sell shares designed to get the lowest possible price when most market participants are trying to get the highest price when selling their shares. The destruction in the share price is clear and this has been going on for years with varying levels of success. Why is it not mentioned?
Since FDA approval the Chair/CEO combo have delivered ASX200 exit and large erosion of shareholder wealth, however the Chair commented in the AR on the 20% increase in the share price and Wolgen mentioned in his letter that some shareholders have 'taken profits' since the AR. Maybe this is a reference to short sellers because few others have profited from Clinuvel in the last 4 year olympic cycle. I have often said how CUV is financially peerless and the AR was a new milestone in this strength, however in regards to share price progression they have vastly underperformed peer stocks and in my opinion this must be laid at managements feet. One of the very best comparisons is Disc medicine, which is many years away from entering the EPP market where CUV enjoys a monopoly. Disc makes significant losses, which is ok for this stage, but they may never even get an approval and they certainly don't make great profits like CUV or have an FDA approved drug in their near term future yet they are valued at about $2 Billion AUD while CUV languishes at about 0.75 Billion (with $160M cash). Amazingly Disc should probably raise a bit of funding and offer cash/shares to take over CUV - CUV already monopolise the market DISC is seeking to enter with their lead drug candidate and they are already profitable - seems like good business sense rather than pouring money down the drain with no guarantee of success in 4-5 years time. What an absurd situation when the hopeful has a valuation ~3 times higher than the commercialised, highly profitable FDA approved market monopoliser. Valuations overall in healthcare stocks are still quite good, among the profitable ones CSL, COH, NAN and PME all enjoy vastly higher PEs than CUV(and these are the companies CUV should compare themselves to). And higher valuations on the 'hope' of one day achieving are profit are much better with many, many loss making or development companies compared to CUV who have pretty much no valuation for any future indication or profit growth baked into the share price.
As I also mentioned it is weird CUV allows this state of affairs to continue, I said some weeks ago that by allowing short attacks, manipulation and an ultra weak share price that management is allowing the narrative to be all negative - which is strange for a company which likes to be very in control of everything. Why do they allow the share price to be slammed and create the narrative? It is the first thing many look at when examining a company for the first time. It is as clear as day they need to perform a share buyback, they are banking $1 Million NPAT about every 11 days and would have about $160 Million now. Just take ~12% of that cash or $20 Million and buyback at least 1 Million shares. This is more than 2% of shares on issue as CUV only has about 49 Million shares issued. If done properly and with some significant insider buying after the buyback is announced it would go a long way to restoring confidence while having lasting benefits to the company and to shareholders. Throw another $10 Million in at the next AR and I would be very surprised if they did not get back into the ASX200 by then if clinical progress also advanced. It would make the financially peerless balance sheet of CUV even stronger and provide relief for long suffering shareholders who have been very supportive over the years.
All IMO DYOR
CUV Price at posting:
$15.49 Sentiment: Buy Disclosure: Held
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