Clinuvel Pharmaceuticals (OTCPK:CLVLY) is a late stage biopharmaceutical company developing an innovative photoprotective pharmaceutical drug under the generic name afamelanotide.
For a in-depth background on the company, see my original article.
Clinuvel was a presenter at the recent Rodman & Renshaw Healthcare Conference last week. The long and meandering road for Clinuvel (formerly Epitan) may finally be nearing commercialization.
Upcoming Catalysts **:
- Preliminary results of Phase III EPP trial in Europe and Australia Q3 / Q4 2009
- Completion of lead Phase III EPP trial in Europe and Australia in Q4 2009
- Phase II PDT results by end of 2009
- Phase III PLE interim results by end of 2009
- US Phase III confirmatory EPP trial initiated in 2010
The company has stated it will start a confirmatory Phase III EPP trial in Europe, pre-empting possible regulatory requirement for more EPP data.
- Branding, pricing, and scaling up of manufacturing of afamelanotide are also expected in the near future.
- If Phase III EPP results are solid, the Company is expected to file for market authorization with the EMEA in 2010.
** This is the timeline presented by the company in publicly released documents.
Trading Behavior of CLVLY.PK:
For the past three months, the stock has been mired in a very tight trading range with low volume. While some other Australian biotech companies have seen share price spikes and heavy interest in that time (including Unilife (UNI), which as has been repeatedly featured on BioMedReports), shareholder interest in Clinuvel has been noticeably silent if judged by the share price.
Long-term shareholders in Clinuvel have not been adequately rewarded at this point in time, when you consider that the share price is about what it was when the company morphed from Epitan to Clinuvel in early 2006.
The stock is currently trading roughly a quarter of the share price it was in April 2007. This is despite the Company further advancing afamelanotide through clinical trials. While much of that has to do with the meltdown in the markets, needless to say, investors have not rushed back into this stock since overall market sentiment has improved this year.
While many long-term shareholders have been through a lot of frustration with the long and winding road that a first-in-class drug such as afamelanotide takes, new Clinuvel shareholders are presented with an opportunity to pick up shares in a late-stage biotech company that has been significantly de-risked over the years.
As a long-term shareholder in Epitan/ Clinuvel I am amazed that shareholders can pick up shares in this company at these discounted prices and not have to go through all the trials and tribulations that us long-term Epitan/ Clinuvel loyalists have had to experience.
If Clinuvel’s drug afamamelanotide makes it to commercialization, new shareholders are being presented with a unique opportunity to say the least. As long-term shareholders have personally discovered, the market does not always reward loyalty. The new Clinuvel investors on the block could be presented with significant gains while not having to experience all the psychic scars that loyal Epitan / Clinuvel followers have had to bear over the past eight years.
Upcoming Binary Events:
There is usually a direct correlation between risk and potential reward in the stock market. If you’re looking for massive gains (3-10 baggers), you must be willing to take on above-average risk.
The stampede into Clinuvel’s stock has not yet started. Many appear to be sitting on the sidelines with this one as they wait for the stock to be further de-risked. As mentioned above, there are several binary events upcoming for the Company.
Will history repeat itself? In August 2006, Clinuvel (CUV) was trading around .30 on the ASX. Clinuvel then experienced a surge in interest and the PPS quadrupled by April 2007.
While the market conditions are different than they were three years ago, Clinuvel has been significantly de-risked since that four-fold run of its stock. The Company is much closer to commercialization now, and the Company has not presented negative news since then. Yet, the market is currently valuing Clinuvel to be worth a fraction of what it did in April 2007 when the stock hit its all-time high.
>> Preliminary Positive Phase III EPP Results - If the Company announces solid preliminary Phase III EPP results, there may be a quick overnight run on this stock. If you want to wait until the stock is even further de-risked, you will not be able to get the stock this cheaply again once significantly more risk has been removed from it. If you are risk-averse, you may decide to wait on the preliminary Phase III EPP results, but you would also be missing out on possible significant gains. Smaller risk, smaller reward.
>> If the Company announces positive PLE Phase III interim results for its PLE trial, I would consider that more significant than most investors probably would (see below). Some sideline investors might be waiting for these results, but as mentioned above, if the results are solid, they will most likely be missing out on larger percentage gains.
>> Bad Phase III EPP Results - If EPP trial results are not solid, this would obviously be a disaster. The company is banking on solid EPP results. It is their current lead trial. If the results of the trial are not good, all bets are off.
Given the Company is planning on confirmatory EPP Phase III trial, I read that as a very positive sign (and one that the market has not fully digested or appreciated). If you read between the lines, the Company (in my opinion) would not proactively initiate a confirmatory Phase III EPP trial unless it was confident the data from the current EPP Phase III trial will be solid.
Another reason for optimism in the EPP trial results is that the Company did report positive Phase III interim results last January.
>> Disappointing Phase III PLE interim results – PLE Phase III interim results were originally presented by the company as being released by the end of Q2 2009. Now, they are expected the by the end of 2009.
While many investors seem to be downplaying the significance of the results of the Phase III PLE trial, I see the pending results of the trial as very significant. The PLE population is the largest on-label market for afamelanotide. If the PLE Phase III trial has disappointing results, you would expect far fewer on-label implant prescriptions for afamelanotide.
While it is true that the company needs just one indication of afamelanotide to be approved for it to be commercialized, disappointing Phase III PLE results would not be very well received by the market.
>> Failure to begin Phase III US trial in 2010 – Investors were told earlier this year in a company newsletter that a key value driver to expect in 1H 2009 was the start of US trials for afamelanotide.
The Company has been mysteriously silent on this since then. The Company still has not formally relocated their office from San Francisco to New Jersey (they have not announced the office opening yet).
The timeline in the CEO’s Rodman & Renshaw presentation shows the Company commencing a confirmation Phase III EPP trial in the US in 2010. If the Company delivers on this, that would be very exciting news. Obviously, it would mean the Company would be much closer to commercialization in the North American market, the largest pharmaceutical market.
My personal take on the delay with the New Jersey office opening is that this is a pivotal strategic time for the Company in which they are seeking pharmaceutical alliances and strategizing how they will enter the US market. I expect some major news on this front in the next 6 months.
Keep an eye on Clinuvel Pharmaceuticals – there will be some major news forthcoming in the coming months if the Phase III EPP results are solid. Those interested in the opportunity would be wise to thoroughly research the Company now before the major watershed events hit the wire. You can then decide at what point (if any) you want to enter this stock.
Do not be deceived by the slumber that this stock has experienced in recent months. Over the coming months, there will be major binary events surrounding this Company with a stream of news breaking fast in a relatively short period of time.
I will present more information once the company crosses the threshold with some of the upcoming binary events.
For more information:
http://www.clinuvel.com - all about the company
Disclosure: Long Clinuvel