Good evening. I'm Verity Wei Smith from Monsoon Communications. Thank you for joining us for Clinuvel's full year results investor presentation. Please note that this webinar is being recorded and will be uploaded on the Clinuvel's website. Before we begin, I'd like to remind everyone that you can submit questions using the Q and A chat function.
I'll now hand over to Malcolm Bhal to begin the presentation.
Thank you, Verity, and welcome to everyone joining us today for this briefing on the financial results of Finyaville Pharmaceuticals for the financial year Ending 30 June 2021. As mentioned, I'm Malcolm Paul, Head of Investor Relations for Clinuvel. Joining me to discuss the results is Doctor. Philippe Walden, Managing Director, and Mr. Darren Kimi, Chief Financial Officer.
Welcome, Philippe and Darren.
Hi, Mel. Go ahead.
Okay. We've now just need to know that we're streaming this webinar at 6 in the evening in Melbourne So European visitors can dial in at the start of their business day, noting it's very early morning for US attendees. The format of today's webinar is to ask Darren as CFO to provide details of the results for the year ending 30 June 2021. And I will also invite Doctor. Walgren to comment on the results from his MD operational and strategic viewpoint.
We have received a number of questions from shareholders and analysts which are covered in this webinar and although questions may still be posted during this webinar We may not be able to address them all in the time we have today. Please also note the financial year 2021 results were posted 8 hours ago to the Australian Stock Exchange with news communique number 4 and a general corporate presentation. Can you go has received a number of requests for press interviews and our managing director has presented today to TV and print media And we'll address the German speaking shareholders on Friday via a YouTube interview. Finally, note that all figures mentioned and reported are in Australian dollars and attendees are advised to refer to the appendix 4e preliminary financial report Without further ado, Mr. Kimi, Darren, can you first provide a summary of the results as announced to the ASX earlier today?
Yeah, it's my pleasure. Thank you. Start off with the headline revenues, expenses and profit figures. The 2021 financial year the Clinuvel Group achieved record annual revenues of AUD48.45 million. It's a 43% increase compared to the 2020 financial year.
At $22,730,000 Expenses were relatively constant with an increase of only 2% to the 3rd this year. Net profit before tax was also a record 25,710,000 and the after tax profit result was 24.72 $1,000,000 another high for Clinuvel.
Thanks, Darren. Before we delve into the results, The audience today may well like to know how you interpret these results as the long standing CFO of the company.
Well, look, it's an excellent result. FY2021 is our 5th consecutive year of positive cash flows and profit since we commenced Commercial production commercial operations back in June 2016 in Europe following the marketing authorization from the EMA. Also marks the 1st full year of commercial operations in the US, which have made a meaningful contribution to this year's results. It's extremely satisfying to be part of the growth story in Klinuel where the journey has taken me through the R and D phase Right through to commercialization of Senes and now to be working on the growth of commercial operations and expanding the R and D program To treat other patient groups, but also to develop new products.
I agree with you. These are excellent results and Should should fill all stakeholders of the year with pride. I now wish to invite our Managing Director, Doctor. Lee Walden, to comment on the results For financial year 2021.
Thank you, Mr. Gul, Mr. Kimi, and also for the Hard work done the past 12 months has been exceptional and much appreciated. The Kinevel 2021 performance asked for a fundamental discussion on its operations and underlying business model. Therefore, I'd like to start with the financial year 'twenty one.
And we have aggressively increased our staff Working from 7 continents, 7 countries, 4 continents. And that was really done to ensure that we better Control the distribution and market access. We increased the group's research Development and innovation capabilities in Singapore. And in doing so, we continue to invest With a modest 2% increase in expenses and the rise was modest since we had already increased From financial year 2019 2020. In accounting for the direct and indirect costs, We generally reinvest about 40% of our revenues to enable further organic growth.
And in keeping with our mission to select, train and accredit prescribing centers and monitor these patients and physicians long term, We continue direct distribution to all hospitals and special medical centers in Europe and in the U. S, very much reflecting The decision we made in 2014 to establish this and follow the business model. And we not only managed to grow the number of credit centers, we also managed to grow the number of patients, The number of SNES administrations and in the U. S, our team managed to secure novel treatment codes, Which facilitated the automatic processing by the insurers to allow the new hormonal treatment to reach porphyria centers faster. Now, as a result of making these resources available, at times when the world was actually constricting, We actually grew global revenues by 47 percent yielding our PBIT, which increased by 123% To 25,700,000.
Now I'm generally more interested in the long range effects Of our strategic measures, not just the 12 months results. So I want us to keep in mind a much longer horizon. Therefore, we zoomed in On the compounded annual growth rates since 2016 with a CAGR of 46% over the last 12 months as see on slide. The solid trend in revenues since the percentage of orders and payments occurred prior to the book year of 2020. So in all, we witness a linear compounded growth 5 consecutive years with double digit expansion rates.
Now in the next graph, you see the orientation of expenditures reflecting our gradual and controlled increase in research Development and Innovation. And as the shareholders of Cleanwell used to us, the expenditures have been scrupulously controlled And the financial management of capital has largely contributed to the strong balance sheet of the group that we enjoy today To withstand the security in the markets, our expenditures have grown year on year, but leveled off from 2020 to 20 21. And taking these considerations further, we now 0 in on the net profits after tax as part of the last 5 years. Again, year 1 sees a double digit increase year on year to 2021, a CAGR of 51% in the last 12 months in net profits. And as alluded to moments ago, we chose in 2014 a distinct commercial approach, Which would provide Clini Valley competitive advantage, yet it was not habitual in our pharmaceutical sector and certainly not A familiar part in Australia.
We established our own team in Europe and in the U. S. To execute a formal So monitoring program and providing us essential long term safety and measures of efficacy. So staying with the same anthem, We instituted the market access and distribution team in house in both continents to directly engage with the hospitals and the insurers On both sides of the Atlantic. And for the new attendees today and the shareholders that know us, In 2014, we judged the 3 corporate auctions, whether either to sell the company And to realize the value then, to enter a license agreement to distribute Senes Or to integrate all the commercial functions in house and go ourselves.
And as you know, we opted for the 3rd option to go ourselves. And so today's glowing results not only fortify once more the linear trajectory of Tlinguvel, But the numbers directly correlate with the risk analysis we made in 2014 and the decisions we took as a Board to set up In Europe and the U. S, the operations. Now this very decision has greatly benefited patients and the families And the overwhelming majority of shareholders at Klineware today. At this point in time, I must really publicly acknowledge all my staff and board And I call it all the cogs in the wheel, the small and the large, who have made clean and well and it's a timepiece, thick With an incredible precision in an environment where we will live under restricted And Constricted Conditions.
So these results provide a foundation for more activities, further expansions, both organically and inorganic. Over to you, Mr. Bo.
Thank you, Doctor. Walgreens. Great context of the strategy and ongoing operations. Mr. Kim, we're going to stick with you for a few questions.
So you commented in the past on the sustainability of the business. Can you give us your thoughts on this topic?
As I've previously mentioned, we've just posted our 5th consecutive profit And our cash reserves have increased to a level that should be sufficient to self finance our planned expansion. Now this indicates fiscal sustainability, but it's not just about what we've achieved financially. It's also how evolved the business processes Have gone to achieve long term sustainability. So we strive to be able to operate independently Without risk of insolvency. So we've come a long way since when I first joined the company where we had around 2 quarters of cash in the bank.
So we feel we're well placed to continue serving our patients and all our stakeholders. So we are committed to grow the commercial part of the business And translate our pharmaceutical technology to other indications and also to wider populations who have an unaddressed Need of protection and DNA repair. But these are potentially larger markets than the existing pharmaceutical business Based on the treatment of EPP patients. So we're working in parallel on long term growth to progress our recent track record for many more years of positive performance.
Okay. Now let's delve into the results, Something a number of shareholders have asked. But starting with revenues, what's driven the significant rise in revenues?
Well, I'll cover Europe and then move to the US. In Europe, revenues were impacted Towards the end of the last financial year by the initial COVID outbreak that spread across the European continent, During the current financial year, FY 2021, we saw patients who had found it previously difficult to get treatment We turn to the expert centers and we also saw new patients receive treatment for the first time. So overall there was a rise in revenues across the European Economic Area although the impact Was constrained when we converted European revenues to our Australian dollar reporting currency, which Had strengthened year on year. If I go to the US, where we commenced commercial operations with initial orders in April 2020, Towards the end of the prior financial year. The completed financial year, however, It gives us a good 12 month overview of our revenues and it's a good measure of how we've entered a new continent, where we've implemented a system To run our U.
S. Commercial operations. In the U. S, we've experienced strong physicians' willingness to prescribe the new treatment. Training and accreditation has required much of our resources and time.
We've expanded the number of specialty centers throughout the US And the insurance is needed to be engaged in each state with their own rules and regulations. As Doctor Walgreens had stated, we've Secured novel treatment codes for prescriptive treatment, which had not existed before for these insurers. So we needed to educate Each and every insurer in all the US states. So, in general, there was a lot of red tape that we had to navigate through to get a new treatment onto the insurers list. Yeah.
We feel that we've executed well and we've obtained faster prior authorizations status for many, Many individual insurers than what we had previously done at the start of the launch, at the tail end of FY 2020. This has resulted in a faster turnaround times, less travel time for patients and faster booking of appointments by the patients. In addition to that, our team in the U. S. Led by Doctor.
Linda Tin has done an outstanding job in distributing and Assisting in the insurers and patients much in the same way that our European team had done through Mrs. Colucci, Doctor Amir, Larry and Mr. Pai had accomplished in Europe over the past 5 years. The US team have trained and accredited over 40 centers and that compares to our plan of 30 centers That we had initially earmarked by the end of 2021, we have over 60 national and state based Private insurers reimbursing the cost of treatment under prior authorization. Some of our U.
S. Patients have now experienced Year round treatment and this reflects a willingness from those patients to continue treatment and it does demonstrate the value that Our drug does provide to our patients. Can I add that in addition to Europe and the US that we've Also entered a new region being the Middle East where we've obtained a breakthrough in Israel, where we have the right to distribute SNS to patients who live All year round in an isolated state such as Israel due to the intensity of the lights and intense heat?
Hope that answers that question. Yes, Darren. And we've got more for you. Shareholders are very interested in the U. S.
Rollout. So let's continue that Can you provide more information on U. S. Cash receipts as well as the receipt cycle in Europe compared to the U. S?
In the U. S, what we've seen so far is that cash receipts are expected to be less Seasonal since the approval of the FDA does allow treatment every 60 days all year round. So this means for the same number of patients the frequency of treatments provided could be higher in some states all year round than what we generally see in Europe And the cash receipts tend to follow that that trend. So we'll see a more constant cash receipt stream coming out of the US And what we have in Europe. Furthermore, the cash receipts cycle in Europe is fairly short with payment being made to Clinuvel in around 30 to 60 days from placement of order in the US.
Apparently that cycle is longer, But with the new and unique treatment codes that have recently been implemented, we're optimistic that this period will
Okay. A shareholder has asked simply what is the pricing policy of the company?
We operate a uniform net price for Sines within each continent and that reflects our frequent communication on this topic, you know, Covering the values of fairness and equitability to patients, to insurers and to physicians as well. So we have 2 different distribution systems, 1 for the U. S. And 1 across Europe and Press is on us to treat the insurers in an equal manner in both US and also treating European insurers Consistently. The reception from U.
S. Insurers and European payers have been very positive Since the company has behaved differently than most other pharmaceutical companies, we find ourselves now working to implement CPI increasing the price across Europe since the price has not changed since we commenced operations back in early 2017 And our underlying cost base having has increased year on year.
Okay. Let's turn to expenses. And again, shareholder comments received that expenses grew by 2%, far less than the previous financial year. So why is this? Clinuvel has increased its commercial operations and And in our clinical programs.
Last year, we'd already spent much on the capital Infrastructure and expenditures in our new facilities in Singapore. And much this year that 2% increase is We do reinvestment in R and D and Innovation, putting new qualified and experienced managers and Towards expenditures in in raw materials and and and supplies. It was also increases across the business Particularly in the freight and handling. I mean, these are also partly offset by savings in other areas. Key items that we saw was cost savings in responding to regulatory audits and bringing communication programs in house.
We also saw a large reduction in local and international staff travel due to COVID, and That had an impact on our expense result. So, the increase this year was modest compared to What we saw last year where we had a significant 55% increase in expenses from the year Previous to last year. So the costs there, therefore, balance remain the same over the 2 years. But nonetheless, they have increased, as I said, by over 50% to support the growth and the expansion of the Group's activities. So I know Doctor Walden will be covering more, about this.
It's certainly in regards to the outlook for our expenses Yeah. Next strategic update, later in September. And, you know, thus, investors, shareholders, and analysts can can Can get further insight there.
Okay. Not taking away from that forthcoming Analysis from Doctor. Walgreens. Do you foresee though an increasing costs in the clinical program since the world and hospitals Start to play pay more attention and and undertake more clinical trials? Yeah.
Yes. Short answer is yes. Certainly, the commencement of the largest bidalago starting to see R and D expenses increase Bearing in mind that the forthcoming Phase 2 clinical studies in XP and in AIS It's much smaller in size. So over time, larger studies will have an impact across our Yeah. Total absolute value of our R and D expenses and our R and D expenses certainly will increase as we further progress In our product and formulation development program.
So where the R and D expenses rise as proportion of total expenses It depends on the need to incur expenses to support the overall growth across all areas of our business.
And I know we'll be working hard on the revenue side of the business to ensure those classic scissors of revenues and expenses will Go in favor of further positive outcomes in the coming years. So this time last year, you said that you see your task as CFO of an ASX 200 company to operate as a going concern as well as providing the company a robust financial buffer As the best foundation for for growth. Now, Darren, this is not your performance assessment, but how are you going on this?
Well, it was part of my performance assessment. I think I'd have to start by my name. So that's that's great. But look, however, a record profit Should be celebrated when everyone is a cheese one. So, you know, I certainly congratulate my colleagues Here at Clinuvel for their role in the outcome.
That's just occurred and certainly thank all our Thank you for their support. It's good to know that the foundation of growth is there for the company. We have In excess of AUD80 1,000,000 in cash, which is certainly sufficient to self finance, our planned expansion And certainly there to allow us to manage any potential economic adversity that May not necessarily foreseen at this stage. So look, it's an enviable position that we find ourselves in and One that benefits all shareholders.
Okay. Thanks, Darren. We'll give you a little break and focus on Doctor. Walgan in Back to the question we've received about growth through acquisition, like inorganic growth, perhaps Doctor. Walgren, you can comment on this.
That's a good question, a relevant one at the moment. For a number of years, we've publicly discussed our quest To add more technologies to Clinuvel and to our portfolio of R and D projects, to put this in context, We invest what in what we know and what we need. And we translate our technologies in a DNA repair program with the LIGO brain disease Search and stroke. And by and large, an acquisition needs to be accretive and complement Our existing activities and the need to meet our objectives. So we continuously scanning and are doing diligence at present On a variety of companies and we're closing in on some others.
So yes, it is one of our objectives and I'm pretty confident that we will grow Inorganically too. In the forthcoming strategic update, that's 3. We will discuss some of these aspects, Also our own organic growth and why we are aiming to complement the transition from a single focused A company to a diversified group. And so our aim is really to arrive at a minimum of 2 pharmaceutical products, which is As soon as in Penumbra and 4 non prescription products to a much wider market to complement and wider our pharmaceutical franchise. So management obtained the mandates to really establish a number of revenue centers And in a methodical way, that's what we are working towards.
Okay. Thanks, Doctor. Walgren.
Mel, perhaps I can turn this around if I can ask you a question. Can you summarize how our communications with shareholders have been The past year. How has it evolved?
Yeah. Sure. Happy to explain. So we have seen the past 24 months a significant increase in communications reflecting the activities of the group. We've built on our sector leadership in the frequency of communications through the regular news communicates And other announcements on the progress of the company.
We do distinguish ourselves as an ASX200 listed company by issuing 6 Use communications per annum, where the MD is quite involved in what we are saying about the company and how we update As well as a number of letters from the chair. Now you can see in this slide, I'll just flick onto Here we go. So you can see in the slide the range of communications That we have been involved in, and particularly the trend in press mentions. But just know that last bar Is to mid August, and so we've yet to complete the year to show a rise, I would expect, over 2020. We continue to address also the large pool of German speaking shareholders by translating the news communicates into German and well received that is.
We have also diversified the way we communicate. We've done more webinars, videos, conference presentations in the last year Ranging from the first operations webinar, already 2 strategic updates and video interviews involving the CEO and the chair. We've also presented our evolving story to more key conferences than before and held many meetings around the conferences And also throughout the year, whether they be with 1 on 1 or in group forums. And indeed around the release of our results, We've already had a number of individual conversations with investors, group conversations, and there will be many more. So For example, we leverage our relationship with the expanded number of independent analysts of Plinyville who host investor meetings, which bring Their clients to the discussion room, and they are also our existing or potential investors in Klinioville.
Our communications team also are very active at using social media channels to communicate our story. So I think on communications, more frequent and more diverse is the short answer. Now since you gave me the floor, Darren, I'd like to just change tack and draw attention to the benefit of shareholders of Plinyebell's performance over the years. So there is a chart here that shows the significance of total shareholder return based on the change in the share price over 1 year, 5, 10 15 years. And I just have to say, I think there are outstanding returns for shareholders.
Thanks, Mel. I do agree with that.
I think we have covered the excellent financial results well in this session. So at this point, I thank our Managing Director and CFO for your insights, but I'd also like to thank our independent analysts And particularly Mrs. David Blake and Mark Pecheas of Bioshares, Mrs. Sarah Mann of Mobus, Doctor. Stanton and Mrs.
Thompson of Jefferies and Doctors Storey and Benson of Wilsons, As well as Chad Troja at Lancet Research and Graham Wickham at Intelligent Investor for their combined efforts to keep investors informed I'm clearly over the year.
Thanks, Malcolm. Look, I look forward to the next opportunity to talk about our company and I'd like to thank all those who have joined us tonight.
Thank you, Bose. Pleasure.
Yes. Thank you to everyone who has joined in. We expect over the coming months to provide another strategic update, number 3, from the managing director and a second operations update webinar. So see you all soon. Thank you.
Thank you.