German event

A Slightly Different Approach than “One More Trial… Please!”

On June 25, 2025, Clinuvel held an investor event in Düsseldorf. The event took place in a relaxed atmosphere at a brewery, attended by a small, manageable group of investors and interested parties.Starting at 7:00 p.m., P. Wolgen introduced the company, emphasizing its historical development up to the present. The discussion quickly turned to the company’s valuation, which is increasingly decoupling from its operational performance. In this context, the company’s handling of the announced but not yet implemented ARP (Asset Repurchasing Program) was perceived as unfortunate.It remained unclear whether and why the company changed its stance and what opportunities are envisioned for the net financial assets exceeding AUD 200 million, though one shouldn’t be surprised if something happens on the M&A front.Clinuvel Valuation: Attractively Valued at Four Times Pre-Tax ProfitThe event was organized by Parmantier, which had previously published an update on the company with a price target of AUD 22. They project revenue growth to AUD 100 million with an EPS of 80 cents for the current fiscal year, with double-digit growth in subsequent years. The cash position is expected to increase toward AUD 250 million. This values Clinuvel at an enterprise value of four times pre-tax profit (excluding share-based payments) for the upcoming fiscal year, which is likely unique in the biotech sector.According to the published presentation, the next milestones include the release of annual results, with an update on ACTH production in the second half of the year. Clinuvel aims for approval in 2026. Note: Ani Pharma received approval in late 2023, is expanding indications for its generic, and is projected to generate USD 300 million in revenue for its portfolio in 2025. These developments, along with vitiligo, VP, and the OTC sector, are fully priced out for Clinuvel.Will Wolgen Stay with the Company?The sentiment that “P. Wolgen is back” prompted the question of whether he might leave the company by year-end. Without a direct answer, it became clear that his mission is not yet complete. This pertains to the product pipeline and its approvals, as well as his role as the largest shareholder in supporting a succession plan that ensures risk-averse management. If Clinuvel were to adopt a “one more trial” approach in the future—spending large sums with success rates in the low double-digit percentage range—the financial resources could be quickly depleted, requiring new capital with the associated dilution effects.Wolgen explained that the company has found its own path, involving smaller studies to gain insights toward market approval. If these studies fail to deliver the desired results, the development program is halted to avoid unnecessary expenditures, which often consume high double-digit sums. Additionally, discussions with health insurers are necessary to secure reimbursement for the indication. Even then, distribution is not automatic and requires careful preparation.As the milestones for the vitiligo program were outlined in the presentation, no new questions or insights arose regarding the development program. Initial readouts for the CUV105 study are expected in H2 2026. Depending on discussions with the FDA, the CUV107 study will be initiated.I then asked whether the timelines for the OTC product launch, as outlined at the beginning of the year, still hold. There was no deviation from the plan, with Clinuvel intending to market the photo-cosmetic product lines supported by medical study results and aiming to achieve sufficient reach through digital media channels.Oh, and yes, we also ate in the meantime—à la carte—and time flew by. By 10:00 p.m., there was little time left to address further questions.When asked by a participant why I invested in Clinuvel, I explained the case. In summary, I stated that a 20% risk is offset by the opportunity for significant upside. However, predicting when sentiment will shift or when larger buyers will enter the market is challenging. All pipeline opportunities are fully priced in, including further growth in the EPP indication.The path forward lies in conquering the U.S. market. To mitigate risks, Clinuvel may need to position itself as a U.S. company in the future, including in terms of production capabilities. Whether this will involve acquisitions remains to be seen.To close with Parmantier’s words: “We expect a strong news flow in the coming months as well. Investors are likely to appreciate this. The risk/reward ratio is improving. Furthermore, we see good chances that the upcoming EMA decisions regarding SCENESSE® for EPP treatment will create positive impulses!”Patience is required, but as always, the final reckoning comes at the end.P.S.: Did I forget anything? Surely. One user in the forum asked how I could hold such a large position. This report provides more than one motivation for that. A highly forward-thinking management is only suitable for patient individuals who tend to act countercyclically. But as always, the final reckoning comes at the end.

Thanks to Waterman for this update