Good to see Clinuvel bought at least some shares back yesterday but they need to buy a lot more. It's certainly the strangest share buyback I have ever witnessed, it doesn't match their fighting words from six months ago or the $20 Million figure bandied about by PW recently. It almost seems the short sellers have information that the buyback is not going to be run like a conventional buyback, ie. conventional equals make announcement and then do what is said? Because otherwise why would the shorters make the best financially performing Biotech the most shorted in the ASX while being massively undervalued as directors recognised six months ago? All very strange, especially when they make lots of noises about showing support in votes, when actually many or most shareholders have more skin in the game than most directors, and are showing excellent support to the CUV strategy. Cochlear last year announced a $75 Million share buyback and completed it in full with no fuss, just a straightforward announcement followed by a straightforward completion of their words. Everyone happy. This year another $75 Million buyback announcement from Cochlear and it has just started and there is absolutely no doubt in anyone's mind that they will once again honour their words and buyback those $75 Million of shares on market in FULL- they are already systematically doing that with the first six days of buying. Let's compare how the respective buybacks are tracking, remember Cochlear are about 25 times larger than Clinuvel but they are only spending about 3 times more on their buyback so the positive effects should be much greater with CUV. There is no doubt in my mind a well run buyback would significantly increase the CUV share price and support the very long term and supportive CUV holders so why not do just that?
COCHLEAR in six days have bought back $4,881,623 worth of shares. CLINUVEL in more than six months have bought back $970,620 worth of shares.
Incredibly in just six days Cochlear has bought more than five times the value of shares compared to what Clinuvel has done in more than six months! Cochlear has practically no shorting (0.39%) unlike Clinuvel with massive daily interest and about 6% of open shorts. Cochlear P/E ~50, CUV ~20 (take out $200 Million cash and much lower in mid teens, amazing). Cochlear only forecasting high single digit growth and they have competitors. Clinuvel with absolute monopoly for many years, solid growth (higher than Cochlear probably IMO) and a blockbuster phase 3 trial running with an already FDA approved drug that will absolutely multiply revenues and profits if approved (ie a growth story few Biotechs with P/Es multiples higher than CUV could ever hope for). Not to mention the Clinuvel ambition to be a household name in just two years, so I guess that will come from the cosmetic side which is not priced in at all - who wouldn't want a safe, protective tan?
Why do things have to be so hard with Clinuvel? This buyback was low hanging fruit and after making ASX announcements they should have followed through in a robust manner just like Cochlear, it is not hard and it matters. Do they really want to be a household name where people are going to be second guessing their words on announcements or anything for that matter?
As a reminder here's what the Clinuvel board of directors said about the crazy undervaluation, and also what the company said in a newsletter regarding the share buyback (underline mine): (Note: since the directors released this there has been some good news on Parkinson's disease indication, DNA Repair results, Disc flunking an EPP trial and great full year results with nice jumps in NPAT and EPS - so what must they think of the 'decoupling' now?)
"Board of Directors view current market capitalisation as decoupled from the Company's value". PW said on the same release "Given expected earnings, underlying growth in existing and new porphyria markets, current cash reserves, and projected expenses over the next 12 months,redistribution of capital to shareholders through a buy-back program is appropriate".
"We have chosen the moment of a repurchase as first clinical results for 2024 are published, andwe will keep at it until those who gamble against the Company have understood the message.Given the expected future cash flows, we are in the position to prolong the program when required, since Board and management do not believe that market value has reflected the Company's performance in recent months. To those shareholders who have proven supportive, we have waited for the right moment to strike on your behalf."
"The share buy-back further increases the relative percentage of ownership for our owners, and thereby compounds CLINUVEL'S strategy to minimise dilution. With 1,500,000 shares (or approximately 3% of the outstanding share capital) to be repurchased, we hold a longer-term view on capital management without jeopardising plans to reinvest and expand the Company."
"The first trading days after the buy-back announcement on 14 March dispelled the myth that the share price is reflective of performance only"
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