If there were still uncertainty about Clinuvel Pharmaceuticals' (CUV: $12.05) long-term positioning following the successful commercialisation of SCENESSE, then that is being resolved at the American Academy of Dermatology (AAD) meeting in Orlando which is currently underway (6 - 11 March). Following 12 months of preparation, Clinuvel is displaying its vision for the future in a 4800-square-foot (446m2), custom-built exhibit called the 'Pavilion of Photomedicine' at AAD. Around 20,000 dermatology professionals are expected to attend this year's meeting.
Clinuvel's strategy is symbiotic in its approach. It is developing three product ranges of luxury photocosmetics that protect users from harmful sunlight. The science behind SCENESSE is incorporated into these products. However, the photocosmetics' global launch will help build awareness of Clinuvel's pharmaceutical products around photoprotection.
Photocosmetic Portfolio
Protect Line
A soft launch has been made for the first photocosmetic 'protect' line, called Cyacelle, which does not contain any melanocortin but repels UVA, UVB, and blue light. A reformulation of these products will be formally launched this year.
Preserve Line
The second range will be the DNA repair product range, including melanocortins that help preserve and repair damaged skin. They will be launched next year. This explains the clinical trials Clinuvel has conducted with SCENESSE in assessing its effect on DNA repair. The preserve line of photocosmetics could also impact the signs of ageing from excessive sunlight exposure, and even prevent skin cancers.
Bronze Line
The third product range, also containing melanocortins, will help protect the skin from harmful sunlight whilst also facilitating bronzing of the skin. The company's marketing department believes this product will "send shockwaves through the system" when launched in mid-2026 in time for the northern hemisphere's summer. This product will activate melanin production in the skin, providing a protecting barrier to harmful effects from the sun.
The difference between the photocosmetics and the pharmaceutical products is that photocosmetics do not permeate into the bloodstream. They will need to be applied daily. Clinuvel's scientists have cleaved the melanocortin molecule, allowing the chain of amino acids to be small enough to penetrate the skin barrier.
The company is positioning these products as allowing consumers to 'redefine the human relationship with the sun', allowing individuals to enjoy exposure to sunlight, benefit from the sun's positive aspects whilst preventing consumers from the sun's harmful effects.
The company states that the skin products industry has been evolving – from when Coco Chanel first promoted the use of olive oil to accelerate tanning – to protective ingredients to block harmful aspects of sunlight.
Use of High-Profile Ambassadors
Other than exhibits at dermatology meetings, Clinuvel is using high profile ambassadors, including a recent event at the home of Lady Gaga. (That connection was made through Sean Parker, a long-time investor in Clinuvel, co-founder of Napster, and the first president of Facebook.) The entry into the photocosmetics market is aimed at bringing its technology into the luxury skin care market over the next two years, a market worth some US$260 billion a year. However, Clinuvel's management team currently affords only relatively modest revenue expectations for its photocosmetics of around US$50 million a year.
Half Year Results - Profit Up 29%
In the first half of this financial year, Clinuvel achieved a 10.5% growth in revenue to $35.6 million. However, there was a good flow-through to the bottom line, with net profit after tax up 29% to $14.1 million. Expenses rose just 2%. The company finished last year with a cash balance of $198 million.
The company maintains a cautious approach to its capital management, with all sales revenue derived from the one product, SCENESSE, which has been administered more than 17,000 times as a depot subcutaneous injection. SCENESSE prevents phototoxic reactions from sunlight in people with erythropoietic protoporphyria (EPP).
Expansion Plans for SCENESSE in Porphyrias
Growth in sales for the treatment of EPP is expected to come from expansion into new areas, increasing the application to adolescents in Europe, as well as increasing the frequency of use in Europe.
The company has completed a study in adolescents (12-17 years of age) in 28 patients (14 adults and 14 adolescents) with a view of filing to extend the label in Europe to adolescents in the second half of this year. The study completed showed consistent safety of the therapy. In Europe, SCENESSE is approved for four injections per year, while in the US the approval is for six injections per year. Clinuvel is seeking to increase the frequency in Europe to six times a year.
Over the last year, the company has signed two distribution agreements for Latin America, including for Columbia and Argentina. In 2024, Clinuvel also filed for Canadian approval.
The company is conducting studies in Variegate Porphyria to expand the indication from just EPP, with the initial study completed.
Expansion to Vitiligo
The main driver for the company over the next three years will be expanding the use of SCENESSE to the treatment of Vitiligo. It represents a potential US$500 million a year in sales for Clinuvel according to the company. The first Phase III study is expected to complete recruitment by the end of June this year, with results early next year. The second 200 patient Phase III study is expected to start in the second half of this year. Patients in the control arm will be given the option to move across to SCENESSE therapy after completing the study.
Clinuvel is also developing initially a generic version of the melanocortin ACTH, which it calls Neuracthel. It has the potential to contribute US$150 million in annual sales, and will be followed by proprietary versions. Clinuvel is capitalised at $603 million.
Bioshares recommendation: Buy
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