Cash burning Disc up about 5.6% last night and CUV dropping...

Cash burning Disc up about 5.6% last night and CUV dropping seems a bit weird on the back of recent news especially when valuations are compared. This is a direct apples/apples comparison because Disc is targeting EPP with their lead molecule while Clinuvel enjoy an absolute monopoly in EPP and will for years to come. It can be seen it is actually a big ripe, juicy apple in CUV compared to one which is not much more than a flower on the tree at this stage yet amazingly the little flower is valued about 2 times more than the big, juicy apple. Disc LOST $76.4 Million USD ($116 M AUD) last year running Phase 1 and 2s (one of which just flunked), while CUV made last FY $31.6 Million PROFIT after taxes. Clinuvel already running a phase 3 into a blockbuster indication in Vitiligo which we know works and this with an already FDA, EMA approved drug that is proven safe so the process for approval is much easier than a New Drug application which Disc will have to file if they get to that point. In my opinion Clinuvel will have Vitiligo approved and commercialised well before Disc can even attempt to enter the EPP market - and Disc have many, many hurdles to get over before they get there - especially now they seem to be going backwards after the recent EPP Phase 2 for Disc was a bit of a flop with no statistically significant benefits over the placebo for time in sun which is what it's all about really in photoprotection.

Also as I mentioned recently, from what I read, even if Disc is successful in many years in entering the EPP market they will have to pay royalties to the company they purchased the trial molecule from and they will also potentially be making very significant milestone payments of tens (maybe hundreds) of millions of dollars! Clinuvel is vertically integrated and none of this is an issue for investors where profits are shared amongst just 50 Million shares. And as we know that 50 Million shares will reduce to 48.5 Million after the first? CUV share buyback, meanwhile Disc will have to raise capital at some point IMO due to large scale cash burn.

So why are Disc much more successful in attracting investor interest despite the prospect of the company just losing money for many years to come, and with no guarantee they will ever get an FDA approval which would obviously be catastrophic for Disc? And even if Disc are successful they may have to share any future profits. Clinuvel, well they have a monopoly in EPP for years to come, and if successful with blockbuster Vitiligo they could likely become the standard of care for that disease. As @Epichemist mentioned CUV really need to update the market on the Vitiligo program, thankfully a Dermatologist in the States gave us all a glimpse of how effective the Clinuvel drug is and past studies are also very positive, so IMO there is little doubt on efficacy and seemingly the company is confident it will all be re-imbursed. What did they say for FDA filing? About 2 years from now? and then 6-10 times jump in annual revenues? Clearly none of that is priced in and shorters betting against Vitiligo approval, just like they bet against EPP approval and they were wrong there, but let's have an update from CUV because it's not the hardest disease to show efficacy.

Disc burning a lot of cash, which is ok for this stage, but they may never even get that approval and they certainly don't make great profits like money-printing CUV yet they are valued at ~ $1.3 Billion AUD while CUV languishes at about 0.7 Billion (with ~$180M cash). Risk/reward is curious with Disc valued entirely on hope and CUV with no future cash flow valuation for Vitiligo or anything else. Amazingly Disc should probably raise more 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 CUV are already profitable - seems like good business sense and risk management rather than pouring money down the drain with no guarantee of success in 4-5 years time. It is really an absurd situation when the hopeful in Disc has a valuation ~2 times higher than the commercialised, highly profitable FDA, EMA, TGA approved market monopoliser in CUV which is running a buyback and also has a Phase 3 running into a blockbuster - Disc certainly doesn't have that but a takeover would give it to them along with Stroke, VP, XP etc. And of course there is the newly announced CUV 1.5 Million share buyback that has just started (yesterday 5K shares) that is intent of restoring value for shareholders in this very profitable and extremely cashed up company. I think it's an interesting comparison and it's going to be really interesting to see how it keeps playing out.

All IMO DYOR