PAR -v- CUV

Esteemed Fellow Paradigmers, this evening allow me to present a comparison between CUV and PAR. I cannot take full credit for this comparison as our friends at Fifty One Capital¹ have drawn me to look into this comparison as they mentioned it their March update earlier this year however, I'm doing a slightly deeper dive.

Clinuvel Pharmaceuticals is an amazing company and has a lot of potential thanks to its SCENSSE product, which is a first-line product aimed at treating patients with the rare genetic skin disorder Erythropoietic Protoporphyria² (EPP for short) and their headquarters? Gosh another Melbourne based company!

Now this particular skin disease affects just 5000 to 10,000 people. Cost of treatment is approx 70,000 Euro. Looking at just OA, Paradigm has a potential market of some 630 Million,but lets just go conservative/realistic and say it might be 5% of the developed world which is still probably around some 5 million odd? (my guess). PAR will be much more affordable at approx $250 per injection (again, my guess).Some background on CUV, in Dec 2014 the European commission approved its drug, Scenessse, SP went from approx $1.90 to $4.8 on the news. Certainly a good lift but take a look at the price today (Figure 2 below),CUV is at a massive $24.48.PAR is currently around $1.60.

In the case of Clinuvel, they also submitted real world evidence.On 9th Jan this year the FDA announced it was "evaluating the SCENESSE® New Drug Application as a Priority Review"³ .This one announcement lifted CUV's price from $18.94 to $22.15 (+17%), current SP is $24.48 but it was $30 not long ago (19th March 2019).Its an easy and relevant comparison to PAR as:"Such economics are possible because the company’s only revenue generating drug, SCENESSE, is highly effective, well tolerated and the only approved treatment for the rare skin disorder erythropoietic protoporphyria (EPP). The frugality of management is a secondary factor". ³

Paradigm also has a highly effective drug that is well tolerated, they also have a single drug, management are top notch (cant wait to meet them for the first time at the next AGM later this year)and are frugal as well and have the shareholders interests in mind. Furthermore, CUV"has a market capitalisation of $1.2 billion yet generated only $9 million in revenue during the half, growing at around 20% on an underlying basis".³

In Paradigm's case, its entirely possible in the first year of revenue they might generate some $25 million, that's a massive 2.78 times CUV's revenue!The most striking comparison is via a graph, take a look at figure 3 below. Surprisingly the the trend for the two companies over the last few years is virtually the same andthe real story for PAR is just being played out with the excellent passing of Phase 2 Primary and Secondary endpoints now being met. If CUV's current revenue is just $9 Million, their market is some 10,000 patients and they too have a similar risk profile ie not many major side effects, just imagine where the SP of PAR is going to end up. Those FiftyOne Cap SP projections based on revenue one day may not be as far fetched as one may think.Paradigmers, we are on to something big here!

This is all my opinion, please do your own research however, also fasten your seatbelts, we are on the way up and quite ready for a possible real lift in the not too distant future...


Figure 1 When did CUV become cash flow positive and how does this relate to their share price? (see Figure 2 below)


Figure 2 CUV Historic milestones


Figure 3 - Trend comparison between CUV and PAR (courtesy Commsec charting)


References
1) http://www.fiftyonecapital.com/paradigm-201903/2019/3/8/paradigm-biopharmaceuticals-ltd
2) https://www.copyright link/business/health/biotechnology/the-strange-rise-of-clinuvel-pharmaceuticals-20190410-p51cv7
3) https://ethicalequities.com.au/blog/clinuvel-pharmaceuticals-asxcuv-profit-growth-continues-h1-2019-half-year-results/
4) Commsec charts