clinuvel

From intersuisse yesterday:

Clinuvel Pharmaceuticals. CUV Tuesday, 22 April 2008
Days in the Sun to Come…
Recommendation Speculative Buy 12 Month Target Price $1.17
Core Investment Proposition
Clinuvel is approaching a classic revaluation trigger, namely the release of
interim Phase III data around in the final quarter of CY08.
Stock price appreciation for Life Science companies is generally observed 4 to 6
months prelude to the release of clinical data, as investors starting to take a
position in a company in expectation of positive clinical trial data.
We think the risk-tolerant speculator should consider a position in Clinuvel.
• If the investor is seeking a trading opportunity, we recommend to buy stock
now and then sell prior to the release of clinical data. We expect the price to
increase significantly nearer to the release of interim Phase III data.
• If the investor is seeking exposure to potential sales of CUV1674, and higher
risk; they can chose to hold the stock beyond the release of the interim Phase
III data. This strategy is riskier because clinical trials have a binary
outcome...either the drug works or it doesn’t. However, if a drug works
spectacularly in Phase III trials, Life Science companies generally experience
further price appreciation. Nonetheless, we expect price volatility after the
release of Phase III data because 1) market participations will adjust there
holding upon their interpretation of the data and 2) the trading activity by the
type of investor mentioned in the first bullet-point.
CUV1647 being targeted for types of skin diseases triggered by sunlight
Clinuvel is focused on development of CUV1647 a compound that causes
pigmentation of the skin, to prevent sunlight-mediated diseases.
• CUV1647 is a unique and first-of-class compound, so if it gains regulatory
approval, it will have the first mover advantage in photo-protective therapies.
• CUV1647 has EMEA (the European Drug Agency) orphan drug status for
erythropoietic porphyria (EPP) and congenital erythropoietic porphyria (CEP).
o EPP is a rare genetic disease with severe skin symptoms with no current
effective preventative therapy, impacting about 1:76k-120k.
o CEP impacts one in a million and is poorly treated.
o Subject to successful completion of the Phase III EPP trial due in 2009,
Clinuvel will seek EMEA marketing authorisation for CUV1647.
o Upon the release of the data, investors will glimpse how effective
CUV1647 is at managing EPP, and we should give the market enough
information to determine if the drug will be clinically viable.
CUV1647 is also in Phase III studies targeting polymorphic light eruption (PLE),
in which 70 of 150 patients in Australia and Europe have been recruited. The
trial expected to conclude in Q409. PLE is a common, long lasting, disorder that
affects 15% of the Caucasian population, but CUV1647 would treat the severest
of PLE patients, as the disease is generally self-managed.
• Given the market potential for treating PLE patients, most of CUV1647’s
value resides with this indication.
• Also, marketing into Europe would be easier (if CUV1647 is approved for
EPP/CEP), as practitioners will be gaining familiarity with the drug and
distribution channels would be in place.
Recommendation
We estimated the value of the company upon a successful Phase III trial at
$382m or $1.17 per share, 167% above the current share price.
We retain our Speculative Buy Recommendation.