Clinuvel: Laying The First Brick For A Fortress Of Commercial Success

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MinusSinus
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Summary

  • Clinuvel Pharmaceuticals, after many, many years, finally became a commercial operation with the introduction of Scenesse as the first treatment for EPP.
  • While EPP is a very profitable first indication that is served now, its market potential is limited.
  • Nevertheless, EPP profits will help to keep the company independent from external financing demands and will finance further growth.
  • The real value growth for Clinuvel will start with commercialization of Scenesse or derivatives for Vitiligo and other diseases that millions of patients are affected by.
  • Fair value based on EPP and vitiligo at EUR 18 to EUR 24 per share (vs. today's stock price of EUR 5.30 per share).

Some long-term investors already had lost their faith, but it finally happened: The Australian pharma/biotech company Clinuvel Pharmaceuticals (OTCPK:CLVLY) Pharmaceuticals, first struggling for many years with finding its market positioning, then struggling with the logic of the administrative authorities on how to prove a drug's efficiency, landed its moon shot in Europe. While the stock has soared impressively through 2016, I believe it is still strongly undervalued.

Clinuvel Pharmaceuticals has developed a drug that, after being delivered as an implant to the fat tissue at the hip with the size of a rice grain, stimulates skin cells to produce melanin. Melanin is the substance that determines the skin tone and acts as a natural protection against sunlight.

Clinuvel has achieved approval by the EMA in October 2014 for market access in Europe for EPP (Erythropoietic protoporphyria), a rare disease that causes severe pain for the patients if they are exposed to sunlight. The pain is so intense that especially during summer, they literally live a life in the dark.

After approval in October 2014, Clinuvel had to install additional procedures to monitor safety and efficiency for the drug, as they had to use unorthodox methods of proving the benefits of Scenesse in a placebo-controlled study - as patients refused to expose themselves to the potential pain. Secondly, Scenesse gives the patients a very obvious tan, so patients know if they are on the drug or on placebo and hence might change their behavior.

In 2016, Clinuvel finally launched Scenesse for EPP in some European countries (Germany, Netherlands, Austria, Italy & Switzerland, as stated in AGM presentation from Nov 2016, p. 9) after they got confirmation from local health insurers that they will cover the rather high expenses. One treatment with Scenesse costs between 15'000 EUR - 19'000 EUR in Europe, and EPP patients

This article was written by

MinusSinus profile picture
76 Followers
Educated as a PhD in Engineering and a MSc in business administration, I enjoy crossing the line between technology and commerce. Professional life so far spend in R&D management, as a business unit CFO, corporate strategy and now again R&D management. Value investor by heart; focusing on businesses that I think I have enough knowledge to understand second level dynamics at least.

Disclosure: I am/we are long CLVLY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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