Good evening. I'm Verity Smith from Monsoon Communications. Thank you for joining us for CLINUVEL's half-year report investor presentation. I'll now hand over to Malcolm Bull to begin.
Thank you, Verity, and greetings to all who have taken time to join us today. It's my pleasure to discuss the financial results for the half year to 31 December 2021, and more generally, the growth and expansion of the CLINUVEL Group, and I'm discussing that with Darren Keamy and Lachlan Hay. Before progressing further, participants should please note that we will be talking about our plans and making forward-looking statements. I'll briefly highlight our legal notice, which outlines that there are many risks that can impact the achievement of plans, and a copy of this notice is on our website and accompanies every company announcement, so many of you will be familiar with it. Also, unless otherwise stated, any references we make today to dollars refer to Australian dollars, which is our reporting currency.
With all that said, I'll hand across to Darren to give an overview of the results.
Thank you, Malcolm. Evening, everyone. Early today, we announced a record December half year profit and the 12th consecutive half year profit for the company since the commencement of commercial operations back in June 2016. For the six months to December 2021, we achieved total revenues of AUD 24.63 million. That's up 56% from the same period of 2020. Total expenses were AUD 16.2 million, 67% up from the same period of 2020. Net profit before tax of AUD 8.72 million. That's 50% increase on the same period of 2020. After-tax profit of AUD 5.87 million, that's 10% down on the same period of 2020.
As you can see, the graph shown highlights the performance of the company in its revenues, expenses, and net profit for the 12 consecutive half years since June 2016. On the balance sheet side of things, cash reserves at 31 December was just under AUD 99 million, and that is sufficient to withstand any financial adverse events that might occur, and also gives us that platform to finance our planned growth and expansion. Finally, our liquidity is high with the current ratio of 15.3 x, and we continue to carry no debt.
Well, they are excellent results, Darren. Record revenues, record operating profit for a December half year, rise in cash, and a strong position overall. If anyone watching is yet to review the detailed results, you can access the full 4D report on our website. I'd now like to pivot the discussion to the operations underlying the results and give more context on what we've seen across the business during the period, and then we'll cover questions. Firstly to you, Lachlan.
Thanks, Malcolm. The first comment is that revenues are currently generated from sales of SCENESSE, that's afamelanotide 16 mg implant. It's the strong ongoing demand for the product that we see from patients with erythropoietic protoporphyria or EPP in both the U.S. and Europe that's driven really the growth. Maybe from that perspective, I pause and hand over to Darren to talk through revenues, and then we can come back and take a step back looking at the business. Darren?
Yeah. Revenues have grown in all the jurisdictions that we have a presence in, and it's Europe and the U.S., Israel, and also there in Switzerland. We are treating more patients and what we're seeing is that the demand is all consistent all year round where we can facilitate that demand. If I may mention for the U.S., led by Dr. Linda Teng, our Operations Head there, been quite successful in growing the number of specialty centers and bringing on board the national and local insurers to reimburse the treatment in the U.S. We're very pleased with that progress that was made there, and we are ahead of our original plan.
Yeah, I think we've talked pretty extensively about the efforts that have gone into both building and maintaining the commercial infrastructure, and those who are interested can see those in the news communiques. In particular, we talked recently about the German negotiations and interactions, and this is 19 months of discussions, preparation over more than 100+ hours, in order to be able to arrive at an agreement in Germany. It's one such example, but ultimately it's this kind of work that contributes to the financial success of the company. As Darren's rightly pointed out, Linda and her team have really focused on facilitating treatment there with the CPT codes and the J-codes, which have helped expedite patient treatment in the U.S.
Yeah. That's helped make access a lot easier there in the U.S.
If we step back then, really I wanna talk about future growth and how we see this operationally. With CLINUVEL, we are seeing a specialty pharmaceutical company that's gradually diversifying. The strategy is being able to stand on our own two feet financially, and then using the team's expertise to be able to create new opportunities. Now, this draws first and foremost on our experience developing a novel drug for an unmet need, and that's EPP. As well as our understanding of melanocortins. These are the family of hormones, peptides and their analogs, that includes afamelanotide. Beyond that an expertise in delivery methods and also in polymers. Broadly speaking, the future growth of the business and that ongoing building really comes around this idea of a house of melanocortins.
Whereby we have pharmaceutical products that meet unmet patient needs and healthcare products or healthcare solutions for broader targeted audiences, all within an integrated business. Now, we're not aware of any other pharmaceutical company that's really focusing on the development of a melanocortin portfolio for both patients and also the general population with unmet needs. How are we doing this? We've shown this slide before, but the intention is to build into this divisional structure. This really reinforces our approach, whereby you have a core pharmaceuticals division, you have Healthcare Solutions Division, the newer Communications Branding and Marketing Division that we've certainly been building over the last 12 months, and the Manufacturing Division as well. All of this underpinned by the Research, Development and Innovation Center at VALLAURIX in Singapore.
Maybe I'll zoom back now and hand back to Darren, where he can talk through really how these investments in growth are reflected in the expenses that we've reported.
Yeah. Thanks, Lachlan. As what I've highlighted earlier on the expenses front, we've had a 67% rise in the reporting period. That's you know obviously a significant rise, but you know that follows a rise of only 2% for the FY 2021 financial year compared to the prior financial year. What I can say is that certainly in the largest expense categories that we reported in the six months was in the materials and related expenses and also in the personnel categories.
The material and related expenses is really the cost of our raw materials, supplies and the conversion costs and the preparation costs that goes into our finished good inventory that is required to meet our near term and longer term commercial demand, but also to support our expected demand in our clinical programs that are currently underway and certainly about to make pretty significant progress. That accounted for about 50% of the overall expense increase. 30% of the overall increase also related to non-cash charges in the share-based payments line. That was particularly influenced by recent issues to staff as part of our remuneration strategy to retain and to incentivize our workforce.
Right. As you say, Darren, that's a non-cash item, but personnel certainly is, and that's our biggest expense line. Do you wanna comment more on that?
Well, that's very important for us to certainly grow and what one would expect from a group that wants to diversify and establish these new divisional structures. You'd expect the global headcount to grow, and that's certainly happened. If we compare the six months that we are reporting against the same period of 2020, we've certainly seen headcount increase, particularly in the communications, branding and marketing areas. You know, I think one point I wanna highlight about the personnel expenses is that where we might differ from our peers is that we do a lot of our functions in-house, whereas many companies may outsource a lot of their work.
If I use an example, in R&D is probably a good example where many companies would use an external supplier, such as a contractor or research organization to conduct their R&D. We, on the other hand, employ our own staff and do our R&D directly. That gets reflected in our personnel line, which you may not see in the accounts of our peer companies.
Yeah. We see that from a commercial perspective too, where generally a company would outsource functions like quality assurance, pharmacovigilance, product reimbursement, whereas many of those functions we still take on in-house, and that's been very much part of the business model. I think maybe the other comment that I'd make there is really we're two years into a fairly challenging pandemic, and I don't think any organization has come through this without making some fundamental shifts. The team has done exceptionally well under these circumstances, and I think that's reflected in the results today too.
Absolutely. We have received some questions on the general trend in expenses, Darren. I'll give you another opportunity to comment on our approach in terms of general expenses to support the business.
Well, we will spend as necessary to support the growth and the expansion of the company in rolling out a multi-pronged strategy. We'll also do it with the deliberate nature and the care in caring expenses that we have applied to our business over the years. Look, it's important to note that we'll be spending more, you know, in the nearer term. In terms of the timing of the expenditures, it does depend on the progress of our clinical and development programs as we, you know, progress those programs through their respective paths. Obviously, it's clear that we will be managing our expenses moving forward, where we will strive to ensure that profitability is certainly maintained.
Right. Let's stick with this Q&A approach. I think it's working well for us, and it reflects a lot of questions we have received. On revenues, some have asked for details on the geographic split between the EU and the U.S. markets. Now, I know, Darren, we don't release such information, but could you explain why?
Well, as a like a one drug company selling in one indication, we do view the company as a single operating segment, so we report accordingly. But we are understanding and appreciative of the interest that you know, our stakeholders wanna know. We are happy to you know, provide further color where we can on the progress in certain geographic regions.
Right. I mean, as we've already done in this webinar.
Yes. Yep.
Now, we have received questions, as you would expect on our clinical trials, the expanded program across a number of areas. Lachlan, for you, please give us an update?
As a quick recap, Mal. Firstly, you have the DNA Repair Program, and we have the ongoing study CUV156, which is focusing on the use of afamelanotide in xeroderma pigmentosum C or XPC patients. In parallel, we recently announced the commencement of the CUV151 study. This is a mechanistic study in disease-free volunteers running very much a parallel protocol. Both of these studies we expect will conclude this year, and we should see data from them. In terms of that broader program, we're also intending to start a study in xeroderma pigmentosum variant, so XPV, a little bit later this year. Moving on to arterial ischemic stroke and the CUV801 study.
We finished enrollment in that study, as we've announced recently, and I think that the key news from that was really around the safety profile of the product. Whenever you're moving into a new indication, you really do wanna make sure that you can monitor your safety closely. To announce that we haven't identified any safety concerns at this point in time is encouraging. Again, expecting results from that program and that study a little bit later this year. Late in 2021, we announced an agreement with the U.S. Food and Drug Administration to commence the vitiligo next vitiligo study, so CUV104. Again, I would expect to see some data from this program a little bit later this year.
Now, what I would say, whenever we're talking about clinical trials, whenever we're talking about timelines, there's always a risk. I think we have to be honest that this has been exacerbated by the pandemic in terms of being able to meet those timelines. Certainly, Dr. Pilar Bilbao and her team are making progress. The other comment that I would make is that there are other advances in our program that I haven't touched upon here, but I think we should be able to share more on these a little bit later this year.
Right. I mean, the progress is evident. An analyst and some other stakeholders have asked about our OTC products and launch timelines. For you, Lachlan, an update on that initiative?
Yeah, absolutely. I'm pretty excited to be able to share the first OTC product line, over-the-counter product line. I also know that there are risks involved with launching a new product, and we've certainly been through that experience as a company with a pharmaceutical product. For us, the intention is to minimize those risks. Right now we're actively building know-how in-house. We're actively building digital teams to be able to target audiences and ultimately the end users of those products. We've identified three categories of highest risk user, and these are the individuals who are at the highest risk of or health risk from exposure to ultraviolet light and High-Energy Visible light. These are categories of individuals who are really underserved by the dermato-cosmetic industry. Nobody's really meeting their needs at this point in time.
The first one, and we put it up on the screen, is extreme outdoors. These are people who by profession or by passion expose themselves to a lot more ambient ultraviolet and HEV than is normal in society. Then you have individuals who have a personal or familial history of skin cancer. There is a genetic risk in skin cancer, and obviously you see that in certain families. Then individuals who are immunosuppressed, and we've run a clinical program in organ transplant patients before, so there's certainly some background information that's available there. In terms of these patients, because of that immunosuppression, often lifelong immunosuppression, they're at much higher risk of sun damage and ultimately skin cancer than the general population.
Okay. Three distinct groups that we're targeting. How are we working right now to reach these groups?
I mean, first you have to identify who these target groups are, and I think we've gone through that process now, and then it's about methodically building audiences, making sure that you're able to engage with these groups and individuals where they are and where they interact. The experience with rare diseases has helped here, so certainly the process that we went through with developing erythropoietic protoporphyria and subsequently in xeroderma pigmentosum, we've learned a lot from that we can apply in the approach here. Generally speaking, though, I think the company's coming from a different direction, which is to be able to leverage the technology that we have, to be able to leverage the know-how that we have, but also really to position ourselves as a global authority in the impact of ultraviolet and HEV and light on health.
The intention is really around direct long-term engagement. Part of what we're building at the moment is a Global Digital Ambassador Program to be able to engage with these audiences longer term. This is different from the sort of fast fashion approach, if you will, that's taken by cosmetic houses.
Mm-hmm. Right.
Firstly, shareholders are gonna see online activity as we start to aggregate these audiences and we test the first product line in those target audiences. Thereafter, we will be officially and publicly launching the first polychromatic photoprotective agent and then rolling out that product. Now, the comment that I'd make is that a good product with poor visibility will fail, and a mediocre product with good visibility will do okay. Now, our intention is to be able to succeed on both fronts, have a good quality product and at the same time being able to engage those audiences and build that visibility. That's the approach there. Now, I know that part of this question has come from one of your analysts, Malcolm, and I think that really they recognize that success in non-medical products is driven by marketing and distribution.
That's very much the focus at the moment. I think it's also recognized that CLINUVEL is very much a leader in photoprotection. What we need to do here is really about gaining visibility with those highest risk audiences, which is exactly where we are in that process at the moment. We've talked a lot about the targeted technology translation.
Mm-hmm.
That's really what I've tried to convey here, making sure that we are able to reach much larger audiences with our technology.
Okay. The strategy is one of logic, I think, and certainly thorough. I know stakeholders want us to be thorough. Just the timeline for the first product launch, what's your current read on that?
Yeah. The audience engagement work is already underway. The official and public product launch will follow the pilot launch and also the incorporation of feedback from that pilot launch.
Okay. On to the next questions, there's a focus on new product development within the ACTH area, new product NEURACTHEL, as well as PRÉNUMBRA, the liquid formulation of afamelanotide. We've received the full gamut of questions on who, what, when, where, why, and how, as you might expect. Darren, where would you like to start to address that?
Oh, look, it's good to see that there's a lot of interest in that part of our program. Look, I think we'll address those questions at a later point when with the fullness of time. For now, I do encourage everybody, who might have interest in our ACTH programs and in our other formulations by going to our recent releases and to our website and to our communiques. Look, we are certainly making progress in both ACTH and in PRÉNUMBRA. You know, we're acutely aware of wishing to, you know, maintain a competitive advantage with these products right now.
Exactly. So I would say there is so much to our business, and we've covered a lot of ground today, and further ground will be covered as we provide updates in the coming months. So at this point, I wanna say thank you, Darren and Lachlan, for walking us through the results, and certainly adding to our knowledge on the strategy and progress of operations.
Thank you, Malcolm.
Thank you, Malcolm.
Thank you also to Monsoon Communications, Verity and Rudi, as have hosted before and hosted today. Thanks to all of you on the line, all of our various stakeholders who have taken the time to dial in and hear about our excellent results. Finally, a recording of the webinar will be posted to the CLINUVEL website quite shortly. For now, goodbye and thank you.