Good morning, ladies and gentlemen. My name is Professor Jeffrey Rosenfeld, and I have the privilege of being the Chair of Clinuvel Pharmaceuticals Limited. As Chair of today's meeting, it's my pleasure to welcome you to Clinuvel's 2026 Annual General Meeting. I note that we have complied with the relevant requirements for convening this meeting and that a quorum is present. As the time is now 10:00 A.M. in Melbourne, I formally declare the meeting open. Before the formal business of the meeting, I'd like to acknowledge the traditional owners of the land on which we meet today, the Wurundjeri people of the Kulin nation. I would also like to pay respects to elders past and present and celebrate the diversity of Aboriginal peoples and their ongoing cultures and connections to the lands and waters of Australia.
I also draw your attention to our legal notice up on the screen, which highlights there are risks which can impact the plans and initiatives we will be discussing today. I am joined today by my fellow Non-Executive Directors. Two Non-Executive Directors are here in person, Mr. Matthew Pringle, Mr. Guy van Dievoet, Ms. Sue Smith, and Dr. Karen Agersborg, who join us online. Dr. Pearl Grimes is an apology for today's meeting as she is presenting at a global dermatology conference. I would also like to welcome our MD and CEO, Dr. Philippe Wolgen, our Chief Operating Officer, Mr. Lachlan Hay, and our Chief Financial Officer, Mr. Peter Vaughan, our Head of Investor Relations, Mr. Malcolm Bull, and our Company Secretary, Ms. Claire Newstead-Sinclair. The company's auditors, Grant Thornton, are represented here today by Partner Mr. Brock Mackenzie.
The auditors will be available to answer questions during item one on the agenda or at the end of the presentations regarding the conduct of the audit and the audit report for the year ended 30th of June 2026. I would also like to welcome our corporate counsel, Arnold Bloch Leibler, who kindly offered to host the meeting today, and I would like to specifically acknowledge Mr. Jeremy Leibler, who is here in the front row. Finally, I would like to welcome representatives from our share registry, Computershare, who are present today. The notice of the meeting has been given in accordance with the company's constitution, and copies are available for you on the company's website, the ASX announcements platform, and at the share registry's registration desk. I will take the notice of meeting and explanatory statement as read.
The format of today's meeting will be a brief Chair address from myself, a formal consideration of the business on today's agenda with an opportunity to ask questions on the formal business, completion of the poll on the formal items of business, and close of the formal part of today's meeting. The Managing Director's update will then follow and then general questions from the floor. Shareholders will be able to ask questions and cast votes at the appropriate times while the meeting is in progress. Before we commence with the formal business of the meeting, I will now provide my opening Chair's address. As I stated at the opening of the meeting, I welcome you to the 2026 Annual General Meeting of Clinuvel Pharmaceuticals. Whether you are in the room or watching online, thank you for being here. I will begin with a plain and contradictory statement.
Our share price is at a 10-year low. Paradoxically, this company's pipeline and balance sheet have never been stronger. Both are true. Let me elaborate why the second one drives everything this board does. This year marked 10 consecutive years of profitable operations, a full decade. In the life sciences where most companies burn cash and dilute their owners, that is very rare, as many of the U.S. investors are ready to tell us. As I told you in March, we delivered the strongest first half-year result in our history. We have paid dividends for nine consecutive years, and today we hold more than AUD 260 million in cash with no debt, the strongest balance sheet Clinuvel has ever held. In a world of political uncertainty and shifting pharmaceutical pricing, that is more than comfort. It is freedom.
We choose our partners, our timing, and our path, and no one else sets them for us. I cannot say the market has been wrong about everything. I will say this, we share your frustration. When performance and share price part company this far and for this long, you are right to ask why. The recent decline followed news of emerging potential competitors. The board has weighed that news carefully for a long time. Our resolve is unchanged. We are building value the market has not yet recognized, and we will not trade the long term for a better headline or short-term hope of share price correction. What are we building? First, growth and a pipeline that is broad. We are widening the use of SCENESSE and bringing new products to market. Top-line results from our first phase III vitiligo study are due in December.
The second phase III vitiligo study begins this quarter. We have lodged a European dossier for the ACTH-based NEURACTHEL. In addition, we continue to develop photocosmetic products with active melanocortin ingredients that preserve and bronze the skin. Together, these can turn Clinuvel from a remarkable single-franchise company into a diversified, durable biopharmaceutical group. Underneath it all sits our injectable peptide platform. It allows variable dosing, and last year, our Managing Director, Philippe Wolgen, put it to you that this platform alone could exceed what we are pursuing today in EPP, that is vitiligo and ACTH, erythropoietic protoporphyria, EPP. Research on new long-acting formulations is being prioritized and accelerated. With the backing of the Singapore Economic Development Board, our Singapore expansion nears completion, due in February 2027. Second, the structure I would like to talk about, because a great business deserves a home that recognizes its worth.
From the January 1st 2027, Clinuvel's head office will be in the United States. That is the natural next step for a business whose largest market, about half of our current revenue, and the majority of future opportunities lies in North America. We have been open that we are considering a full Nasdaq listing, considering a delisting from the ASX, and a redomiciliation. The reason is simple. We want Clinuvel recognized by a capital market most likely to appreciate a profitable franchise and a pipeline of this depth. Philippe will update you on this today. Third, the leadership you can count on. The board has spent time considering succession and convinced our Managing Director to commit to extend his employment agreement to the June 30th 2029, with no retention awards and no long-term incentives attached.
We intend to revisit his long-term incentives in time to bring him in line with market practice. Let me address remuneration directly, because you have asked the question. We are an international company. All our revenue is earned outside Australia, and more than 83% of our people live outside it. Our pay must therefore be measured against an international peer group, and we have selected 28 U.S.-listed and 12 Australian-listed companies for that purpose. Against that group, our Managing Director's total remuneration sits below the median. In last year's search for a comparable American CEO, the median pay for equivalent talent is a multiple of this. Cutting pay in step with share price would not strengthen our company. It is a ludicrous proposition, because as the share price increases, we would need to adjust remuneration too. It would put at risk the very leadership that is delivering results.
On the evidence, the criticism is not justified. I also add that proxy advisors steadfastly refuse to widen their comparison beyond Australia, and that is a frustration we will not hide. Let me add that many of you remain invested in the company because you silently know that Philippe is tantamount to the founder who owns the largest percentage in this company. Finally, continuity. The company has critical milestones to deliver in FY 2027, and Philippe will set them out for you. The Board that has led this strategy should be the Board that sees it through. Dr. Pearl Grimes is a global authority in dermatologic conditions and is central to our vitiligo program. Mr. Guy van Dievoet helps lead our financial planning, strategy, and commercial work, which is vital to everything ahead, including the Nasdaq listing.
If you have not yet voted, I urge you to support both Directors seeking re-election. Shareholders, Clinuvel has achieved a decade of profit, nine years of dividends, a fortress balance sheet, a pipeline moving into its most important year. Prices fall and prices recover, but that record was built by people who did not flinch, and the Board will not either. Thank you for your trust and your attention. I will now move to the business of the meeting. I turn first to the formal business of the meeting. There are four items of business for today, three of which require a formal resolution, including one non-binding ordinary resolution, two binding ordinary resolutions, and one contingent item of business.
In order to ascertain the true intention of shareholders and to reflect our focus on transparent governance in accordance with the company's constitution, as Chair, I have determined to call a poll on all resolutions to be considered at today's meeting. The voting procedure. As valid proxies received have been recorded and the votes for each resolution will be displayed on screen behind me, and as such, I won't read out the numbers as we deal with each resolution. As advised in the notice of meeting, where proxies have been properly nominated to be at the Chair's discretion, those proxy votes will be cast in favor of resolution one and three, and against for contingent resolution four.
With regard to voting on resolutions, all shareholders, proxy holders, and authorized corporate representatives who are entitled to vote should have been issued with blue voting cards, as you can see on the screens. A voting card also entitles you to comment and ask questions at this meeting. If anyone present is entitled to vote and does not have a voting card, please see one of our Computershare staff at the registration table at the entrance door, and they will assist you. Non-voting shareholders were issued with a yellow shareholder attendance admission card upon entering, as you can see on the screens. A shareholder attendance card will not allow you to vote. However, you may still comment and ask questions. White cards are visitor cards and indicate a visitor.
Visitors and media are reminded that whilst we welcome you at this meeting, it is a shareholder meeting, and you may not make comments or ask questions. If I call on you, please raise your voting or non-voting attendance card prior to speaking to identify yourself as a shareholder. If you are acting as a proxy, please state clearly who you are appointed to represent when introducing yourself to the meeting. We will provide the opportunity at the end of the formal items of business for shareholders to ask questions. Voting on all resolutions is allowed up until the time the poll is closed. A representative from our share registry, Mr. Peter Renda of Computershare, will now provide details of the poll process. Peter.
Thank you, Mr. Chairman. Good morning, ladies and gentlemen. Shareholders entitled to vote hold blue cards. On the back of your blue card are the four items of business. Please mark next to each item how you'd like to cast your vote. I'll be bringing around a purple poll box. Please lodge your card in here to ensure your vote is counted. Thank you, Mr. Chairman.
When Computershare have tallied the poll results, we will announce the results following conclusion of today's meeting on the ASX market announcement platform. Proxies. With regard to the proxies, we have engaged the services of our share registry to compile and report on the proxy voting. Computershare has provided its formal report disclosing the proxy votes received. Before opening the poll, I wish to remind shareholders that the poll will remain open for an additional minute after we have considered all resolutions. If you have any questions on the formal part of today's agenda, please follow the questions process as previously advised. I now declare the poll open. I will now move to the items of business to be considered today. Item one, the financial statements and reports of directors and auditors.
The first item is to receive and consider the financial statements and reports of directors and auditors for the financial year ended June 30, 2026. These items are contained in the annual report, so I will ask that they be taken as read. The annual report is available on the ASX announcement platform or the company's website. The Corporations Act requires the accounts and reports to be laid before shareholders at the AGM. However, except as set out in resolution one to be considered later, there is no requirement for a vote of members to be taken on them. No written questions to the auditor were received by the cutoff date of five business days before this meeting. Questions may be directed through myself to the auditor in relation to the conduct of the audit, the audit report, the company's accounting policies, or the independence of the auditor.
Does any shareholder have any questions or comments on the financial statements and reports? No? I will proceed with the agenda. Brock Mackenzie of Grant Thornton is available to answer questions. Since there are no further questions, we will move to the formal resolutions that need to be considered. Proxies received in relation to the formal resolutions will be set out in the slides displayed on the screen behind me. I remind you that we will provide the opportunity at the end of the formal items of business for shareholders to ask questions. Item two is resolution one. The first item requiring a resolution is to adopt the remuneration report forming part of the Director's report for the financial year ended June 30, 2026. The vote on this resolution is advisory only and does not bind the Directors or the company.
I now refer you to the proxies received prior to the meeting as displayed on the screens. I now move that shareholders consider, and if thought fit, pass the ordinary resolution. I now move to resolution two. Give you a chance to complete that voting if you haven't. Resolution two is the re-election of Director Dr. Pearl Grimes as Director of the company. I confirm that all Directors other than Dr. Pearl Grimes recommend that shareholders vote in favor of her re-election. We will now turn to Pearl Grimes to make some comments in support of her re-election. As Pearl is at her conference, we have a recording of Pearl.
Good morning to all of you attending.
Thank you.
Good morning to all of you attending the meeting, and also to those of you who are attending the meeting virtually. Sorry I cannot join you in Melbourne today, because I had made a previous commitment to be an expert lecturer at the American Society for Dermatologic Surgery meeting in San Diego, and that is why I am not with you in Melbourne today. This brings me to provide a succinct overview of my professional background. My specialty in dermatology spans over 45 years of work into a spectrum of areas of expertise, including melanocortins, disorders of pigmentation, and I have approached these conditions from basic science research, clinical research, as well as having been involved in myriad clinical trials over the years. I also have two directorships. I am the founder and director of the Vitiligo and Pigmentation Institute of Southern California.
Patients travel from around the world to seek out our treatment and my expertise in this arena. I am also the director of the Grimes Center for Medical and Aesthetic Treatment, and P'erl, The Melasma Research & Treatment Institute. We treat patients with a variety of dermatologic conditions in the medical arena as well as aesthetic arena, and we treat patients from all ethnicities and skin types. I am also a clinical professor of dermatology at the David Geffen School of Medicine, UCLA here in Los Angeles, and I am the Chief Dermatologist for Versicolor Technologies. To round out my biography, I recently completed my term as President of the Global Vitiligo Foundation.
I am truly passionate about the science, the diagnosis, and treatment of patients with dermatologic conditions, specifically focusing on pigmentary disorders, and I am passionate about these conditions, and it aligns well with the objectives of Clinuvel. I have brought my history, my expertise, my experience, and my networks to Clinuvel when I joined the board in September of 2024. As a member of the board, I have applied my specialist knowledge by taking an active role in the development and the progress of Clinuvel's vitiligo program. We will soon launch the CUV107 study for vitiligo, and very soon we are excited to share the results of the CUV105 study, which has been completed.
While we have some way to go in the vitiligo platform programs, we recognize the significant contribution and potential for this work and the impact that it will have on vitiligo patients around the globe. Moreover, we recognize the financial profile for the company. My expertise in vitiligo and the significance of the vitiligo program to the future of the company is one important reason that I am hoping that you will support my re-election to the board. Clinuvel is also progressing in multiple other arenas of great science and expertise. There is the NEURACTHEL program. There are a range of other programs, including our PhotoCosmetics, and we are also developing the liquid injectable peptide platform being researched and developed at the Singapore Research Development and Innovation Center. The company is transforming into a very diversified biopharmaceutical company, and this is truly exciting.
The next three years will be critical to achieving the long-term mission and objectives for Clinuvel. As an active member of the board, I am involved in discussing all matters that come before it and the critical decisions being made by the board. The diversity of the board and the vigorous debate that we have in decision-making is not only invigorating for me, but it also is pivotal in driving the strategic vision of the company. I am enjoying my tenure as a Non-Executive Director and making meaningful contributions, particularly in clinical science, but also board considerations and strategies in general. I would very much like to continue in this role with your support to re-elect me today. I commit to maintain my active role on the board and to contribute as much as I can, given my expertise and my long-term experience.
I thank you in advance for this continued opportunity. Thank you.
Very good. We are indeed fortunate to have Pearl on our board. I move that Dr. Pearl Grimes be re-elected as a Director on the basis set out in the notice of Annual General Meeting. I now refer you to the proxies received prior to the meeting as displayed on the screen. I now move that shareholders consider and, if thought fit, pass the ordinary resolution, if you have not already done so. I now move to resolution three, the re-election of Director Mr. Guy van Dievoet as a Director of the company.
I confirm that all Directors other than Mr. Guy van Dievoet recommend that shareholders vote in favor of his re-election. I move that Mr. Guy van Dievoet be elected as a Director on the basis set out in the notice of AGM. I now refer you to the proxies received prior to the meeting as displayed on the screen.
I now move that shareholders consider and, if thought fit, pass the ordinary resolution, if you haven't already done so. I will now move to resolution four. This is the spill resolution conditional item. It pertains to the holding of a spill meeting. This conditional item of business will only be considered if at least 25% of the votes cast on resolution one are against the adoption of the remuneration report. I move that shareholders consider and, if thought fit, vote against resolution four as set out in the notice of the AGM. I now refer you to the proxies received prior to the vote meeting as displayed on the screen. I now formally put this resolution to the meeting. Do any shareholders have any questions or comments in relation to the resolutions today? If yes. Doesn't look like we do at the moment, so that's okay. I will proceed.
This concludes the formal resolutions to be considered. If you require further time to complete the poll, please indicate by raising your hand. Well, as there's been no request for additional time, I now declare the poll closed. I'll give you time to hand in your blue cards. Then I will move to close the formal part of the meeting. All blue cards collected.
Thank you, Mr. Chairman.
Thank you. I now hand over to Dr. Wolgen to provide his managing director's address. Philippe.
Thank you, Jeffrey. Yes. Welcome to Arnold Bloch Leibler for hosting this meeting, Grant Thornton, our longstanding auditors, and probably the most revered and longstanding analyst in the room, Mark Pachacz from Bioshares. It is somewhat of a memorable meeting. It is 21 years, 22nd meeting that I am leading. Today, we have opted to give you a narrative which reflects the thinking of a board and management. You are not going to have a standard strategic update, but I am going to walk you through a thought process that has been in place for almost two decades. That is not to say that it is axiomatic, dogmatic. There is flexibility in what we do, but it is a privilege to have a plan and to execute the plan along a number of steps.
I am sure that after all the questions that we received, the couple the last few weeks, by the time I sit down, most of these questions would have been answered. Before I start, I want to forewarn you against forward-looking statements. It is not my intention for you to walk away and speculate on the news flow that is going to come, but it is exciting of what we are going to reveal or unveil the first time today. The address is going to come in three sections: capital markets, capital allocation, and strategy and future. To start off with capital markets, what does a company the size of Clinuvel do in terms of investor relations? The question that is justified is, how effective is it?
What I share with you is two years of investor interactions, that is more than 400 investor contacts, of which more than 95 are face-to-face, and it counts 36 conferences and non-deal roadshows, as it is known in our jargon. These non-deal roadshows are organized mostly by brokers, intermediaries, investment banks, twice a year in Australia after the half-year and full-year results, and throughout the year, tagging on life science conferences and in Asia, Europe, and U.S. What I am giving you today is a breakdown and the feedback that we uncensored received, the good and the bad on the company. What you see here is a summary of 11 years of Clinuvel's share registry.
On a good day, you would say, "Well, it is very stable." On a bad day, you would say, "Well, there is not much change or institutional leadership on the register of the company." The impartial market feedback that we get in terms of reports from investment bankers and brokers, I am going to share a few with you. The U.S. investment bank that we visited in 2025 said, "Well, company is characterized as a free large market option, self-funded pipeline, a net margin of 36%, and not the usual cash-burning binary bet, but a company with a proven track record and drug delivery know-how." We take these kind of advices and feedback into our stride, the good and the bad, and it affects our strategies.
The Hong Kong specialized fund said, "A company that openly names its risks and funds the answers will likely take the discipline to a much wider field." A German portfolio manager wrote, "Markets can misprice a self-funded company while it compounds its balance sheet ahead of the next growth phase, and Clinuvel ranks first on our watch list." A first takeaway from this is, you need to address these, what we call qualified institutional buyers or sophisticated professional investors, continuously for them to build a continuum and a narrative from the company year on year. What I share with you today is the content of these one-on-one meetings that normally last about an hour, and you discuss the opportunities, the equity story that you bring to these investors versus the risks. We call that the rule of seven.
Usually, we talk about revenues, profit, technology, cash flows, medical innovation, catalysts, size of markets, market management, and board. What you see on these charts on the right, and we will post this the next three days on the ASX so that you can read it in your own time, but the triple pluses is where the various investors in Australia and U.S. put most of its emphasis. Not surprisingly, in Australia, the emphasis in these meetings is more on revenues and profit, on cash flows, on catalysts. That goes both ways because the discussions in Australia are also about the continuation of cash flows and profits and the jeopardy, the threat that is perceived of losing the cash flows. In the U.S., it is much less of an issue because competition in pharmaceuticals is usual. The execution is high on the list of the U.S. investors.
The time to market is more in Australia and so forth. What we had as feedback in 2026 from the professional institutions in U.S. and Australia was a company with an attractive valuation, with interesting data to date. A commercial asset generating cash flow in a thoughtfully built profitable business. They are consistently viewed as a well-run, mature, and differentiated opportunity, particularly relative to other ASX biotech names. A genuine in-house engine for generating new pipelines, peptide platforms, R&D, underpinning the pipeline beyond CUV1647. There is real risk in the market, but there is also perceived risk.
The perceived risks weighs heavily on our hearts when we come back to board and say, "Well, it is not only the risk that is quantified in the market, it is also how people perceive the company." Seven names have been used to benchmark Clinuvel over the last two years, and I want to share with you the commonality, but also the heuristics, the takeaway from having the discussion on these seven names. Metabolic Pharmaceuticals, a company that came to the fore two decades ago with a peak market cap of AUD 500 million. It transformed into Calzada and PolyNovo, restructured its business, repositioned its business, and went from weight loss into polymer technology. Phosphagenics, as some of you know, a company focused on transdermal technologies, at the peak AUD 150 million, repositioned as Avecho and is now AUD 65, and so forth down the list.
What you see in this list is that six out of the seven, over two decades, have lost value. That is the oscillation that is usual in biotech. There is no surprise there. We came back home and said, "Well, hang on a second. How do we escape the valley of value?" The valley of value is a company that is perceived as a single product or platform, but it doesn't escape over the decades evaluation trap. The answer is a remedy, a remedy of three. First of all is the continuous investment in pipeline. Those companies that stall or stop reinvesting in the new technologies, the new trends, and the new opportunities will probably not come out of the valley. The next one is, do the companies belong to the Magnificent Seven?
Magnificent Seven in U.S. terms is oncology, immunotherapies, metabolic diseases, degenerative, central nervous system, infectious diseases, radiopharmaceuticals. We said to ourselves, "If the proof of concept has succeeded by monetizing an asset in an orphan indication, then our ambition is to fall within the Magnificent Seven." It was a steep ambition, and we had a plan for it. It doesn't mean that the plan always materializes, comes to fruition, but it was a damn good attempt, and we will unveil that today to you. That brings to the question that you have posed many, many times in written format and verbally, is about what does a company of our size do with AUD 252 million at the June 30th 2026? Why do you need that buffer of cash? Capital allocation is central to what we do.
The first figures that I want to share with you and for you to take home and reflect on is, we've incurred expenses from 2017 to 2026, about AUD 300 million, which is compared to our peers in Australia and the U.S., a record low. It was deliberate. It was not a coincidental finding. We managed the company by integrating all the skills in-house and keeping the fixed and variable costs low. While we incurred these expenses, the aim was to make the company, to turn the company economically profitable, and we had a net increase over that period of AUD 230 million. The capital required from 2006 to 2026, 20 years, was AUD 356 million. AUD 356 million to develop new drugs, new technologies to market, benchmarked against U.S. and European companies, was again a talking point during the investor meetings in Europe, U.S., and Australia.
We projected, and our CFO in the room, Peter Vaughan, said in August 2026, after the full year results, that we would maximum spend AUD 55 million per year over the next four years. That's AUD 220 million. The math is not overly complex. If you hold AUD 252 million in cash and you project to spend AUD 220 million, there is little buffer, little room. At the same time, we said to you, to protect your interest, shareholder interest, is we want to strive for a three-year buffer in OPEX and CAPEX.
The AUD 220 million and the AUD 252 million leave you, at the moment, without any accounting for any future revenues and profits, a AUD 32 million profit. Armed with that knowledge and executing against these metrics over two decades, the question is raised, now what is next and why does it take so damn long in this company?
Well, the answer to you is, we all knew what we were in for. The development cycles are 10 - 15 years, and how do you survive these development cycles while developing the next set of products? I have been somehow intrigued, if I relate it to myself and then bring it back to board, I have been intrigued by one question that I came across in 2000, and 26 years ago, I was learning my trade. That question was, how do you reinvent, how do you reposition a company that has been doing one thing for a long time? It is a mesmerizing question, and the underlying question that answers what happened, for instance, in Fujifilm. We all know the story about Kodak that lost market share, but the Fujifilm story in 2000 was really not well told, in my view.
That pointed a president, Komori, who writes his memoirs on this, and his only question when he entered the company is, "What are we good at?" Now, the cynical in the room could say, "Well, I do not know what the company is good at." But the very question of posing what a company is good at makes you search for the inventory, the skills, the talent, and the very essence of what this company is. We posed that question, and at the same time, we needed to observe the economics and also the market and in-house support and willingness to actually execute a plan. We observed three principles. The first one, across the board, and that started on the first day 22 years ago, learning from the cases, you need to observe a financial discipline, a fiscal property that probably does not belong in our industry.
We have done that. That gives you durability, and that protects shareholders' interest. It is not conventional, but it is not wrong, because the very essence that we observed the financial discipline is the reason we are here today. At the same time, we knew that the strategy would be long-term. Now, what kind of industry asks shareholders to invest in technology that will take 10 - 15 years? My director, co-director, Matt Pringle, said a half an hour ago, "Well, welcome to mining." We are all looking for the golden nugget. The same in biotech. Then the third one is there has to be a plan. If there is no plan, a company is asked to hand back its cash to shareholders.
If there is a plan that is tested and that is validated, and we call it plan A, B, and C, and the contingency D, if everything goes wrong, there has to be a plan. We shared with you about 10 years ago, and very few have picked it up, although we have made it public, and probably we have not communicated it well. Plan A has been and is to focus on peptides. Peptides at the time were not en vogue. They were not trendy. We were one of the very few talking to investors in Europe and U.S. that peptides were the future. From peptides, we understood that we needed to deliver it in a certain fashion, so we formed a team that started to understand polymers. Polymers are biodegradable plastics that inserted into the human body and that resorb, that do not need to be removed.
With that, we said to ourselves, and that was the Chairman at the time, he said, "Well, show me a financial proof of principle. Can you make money out of it?" That led to the first orphan indication, EPP. I can share with you the first boards that we had 22 years ago genuinely believed that we would commoditize SCENESSE as a AUD 300 drug. If we had done what the boards wanted 22 years ago, we would not have stood here today. The plan A had been peptides, polymers, delivery into a proof of concept. We have completed that. Plan B was and is, can we clinically expand it?
We have seen a couple of days ago that we filed our first dossier for ACTH, NEURACTHEL, a related peptide to afamelanotide to the European countries, and that is part of plan B, the expansion from orphan to larger markets. Plan C, and that is the most exciting part of the 22 years, but it has taken that long, is the clinical application and making sure that what you have learned along the way, these peptides, polymers, and delivery methods are actually formulated in what we call long-acting injectables. That is an expensive word of delivering any drug into your body that has a long concentration in your bloodstream, as opposed to injecting it daily or weekly or ingesting it as a pill.
We said it is more efficient and effective to have an integrated business model, integrating all parts into a pharmaceutical company because you retain control and you get better at it. The missing piece has been manufacturing. So I leave this for you to read and digest in your own time at home. What you take away now is the foundation for us to build a sustainable business has been building the infrastructure. The infrastructure is finding the specific talent in the world, and that is not easy. How many polymer chemists are there? How many peptide chemists are there? How many formulations scientists are there? Can we get them to work for us, or are they going to competitors? That was a search, and we have succeeded in that, and that led to the Singapore Research and Development Center.
The second pillar of the house was the financial discipline over decades. Some to the chagrin of shareholders say, "Well, why are they hoarding all their cash? Why are they collecting all their profits? It is so unconventional. Why are they not coming back to markets?" There was a plan. The third part was and is the data generation. You can make and take decisions, but these decisions need to be what we call in our industry validated. They need to be repetitive, they need to be reproducible, and they need to be surrounded by expert opinions that issue reports and correct you and say, "Well, ladies and gentlemen, you are on the wrong track," or, "Yes, this is the right strategy," or, "Yes, there is a demand for what you do," or, "This is how the market will evolve in one or two decades." We heeded that advice.
And the last part is risk management. And some of you that have followed the company over the years and decades, you have heard me talking at every single interview or publicly or writing about risks. And yes, I am drawn to risks for a very specific reason, because I do not mind if a company fails. I do not mind if our staff commits errors. But these risks need to be calculated, foreseen. But the most tragic feature that could happen to a company is that we have blind spots, that we have not seen the risk or we haven't calculated the risks. And part of our risk management and part of protection of you is a cash buffer. So, the strategies in the future led to the execution of plan A, B, and C, and we are in the middle of C, and it's taken two decades.
And then, as part of risk management, it is about diversifying. First, focusing a whole team on peptides and polymers and making sure that you get one thing right, which is EPP. And EPP has yielded more returns than we ever thought two decades ago. But after a certain point in time, you diversify the company piecemeal, step by step. And this is the most exciting part. Why am I exciting? I tell you why. Because it is an absolute privilege to have a plan with senior group of people, believe in the plan, have the plan tested, and executing it. But it's not a one-day butterfly. It's not spectacular, brief, and gone. It is a process, an exercise that takes years, and what I call an inhumane amount of patience.
And when a strategy then comes to the fore, to fruition, you think, well, there's very little then more than can reward you that. So, what was the strategy? What are we exactly executing? It's one branded product, for now with two applications, an orphan market and a larger market. Then we said to ourselves, "Well, that's risky, because if that product falls over, what is next?" And we said to ourselves, "Well, then we go to a larger market in a related molecule, and that is a generic product, that is NEURACTHEL." And that's been filed first in Europe and next in the U.S. Then we said to ourselves, "Well, there is room to improve the delivery of that long-acting formulation. Is it on the market?" And the answer was, it doesn't exist. So we hired engineers to design and to compose our own disposable device.
In the meantime, we think, "Well, if we build that value, these assets in-house, can we monetize it at some point, not only for us, but for third parties?" So that you build IP around it. The fourth one was and is from photomedicine, we can transcend to photocosmetics because there is a need. It's not simple because no one on the planet has done it. All the cosmetic houses have not been able to formulate melanocortins and transdermals. So you can say, "Well, are you delusional? Why are you, as a single company, able to do it?" But the attempt continues until we get it right.
Then we identified, we need to optimize what I called an outdated scoring system in vitiligo, because in order to measure vitiligo, you take the hand of a human being and superimpose it on the surface of the body and estimate roughly how much percentage of vitiligo you have. Surely not in 2026. We can do better technologically-wise. So we hired our programmers and AI engineers who have designed the first vitiligo visual algorithm. The cost efficiency that we all and you benefited from by integrating the company was very much based on the fact that you integrated all the skills, the talent, and the services in-house. The most exquisitely expensive exercise in running clinical trials is appointing a clinical research organization, a third party that runs the clinical trials for you.
That means they bill you for the patients, for engaging the centers for the rights, for the travel, and we said, "No, we can cut these costs and retain the knowledge in-house by acting as our own CRO." It took years to find the clinical talent actually to run the clinical trials. But you've seen the result in our P&L because we don't pay these astronomical fees to CROs. If you do, then you are subject to capital raises, dilution, and debt financing. But the highlight of all this is that in the quest for value, in the quest for the next thing, the next product, what could follow on from CUV102, we learned, not intentionally, but we learned the challenges to formulate long-acting formulations, long-acting products that last one week, one month, three months, six months. We said, "Well, we benefit from it.
Our patients benefit from it. Could it be that we can do that ourselves in-house?" For that, you need specified, specific talent around the world that want to stay and develop for a decade the next generation of formulations. I'm pretty happy to say that we're succeeding in that mission. Then the question then arises, and certainly some investors and analysts have picked up on it, and said, "Well, if you, Clinuvel, are now going into the business of formulating technologies that act mid and long term, what else can you do with it? What other peptides can you use in that vehicle?" As in the last days of Steve Jobs, addressed to Harvard, said, "I won't tell you what we're going to do, but why don't you connect the dots?" From peptides to polymers to long-acting technologies, that opened up a whole new business.
The last piece of the puzzle is the manufacturing, and the manufacturing requires cash, requires CAPEX, requires durability, and it requires the same kind of patience. But having done it at small scale experimentally first in-house, the logical next step, given the market demand for long-acting drugs, is to bring that manufacturing in-house. That brings me back to the Fujifilm Company. Fujifilm commanded 90% of the colored films in 2000 globally. We were all in love with the vibrant colors of Fujifilm. But what Komori did by asking the question of what we are good at is making an inventory of skills and building out. Fujifilm today is a $25 billion company that focuses on biologics, chemicals, and healthcare. They moved away from film to healthcare, and I'm somehow intrigued by that transformation.
How do you transform a company from a peptide expert, polymer expert, to become a drug delivery expert? That is very much what you see in front of you happening gradually. With that, I come to the last piece of the puzzle, the timelines. You will expect from us an update on the U.S. listing. We posted to you a couple of weeks ago that the board is considering a U.S. listing and a delisting from the ASX. An update is coming your way the next few weeks. We have now validated finally the CUV107 protocol internally and externally. That's a three-month delay. That means that the start of the 107 study will be now in February and not in November, because it sequentially follows.
We will give you an update on the restructure repositioning of this company. That follows on from the discussion we had today on lifting the tip of the veil of what we are morphing into. The top line results will come in December of CUV105, understanding the efficacy of the combination of narrowband UVB and afamelanotide. Then three months later, or two months later, the CUV107 study will start. That sequel of news flow will be completed with an update on our commercial footprint in U.S. and Europe, that, contrary to what you believe, is not receding. On that note, I hand back to our Chairman, Jeffrey. Thank you.
Thanks very much, Philippe. We now turn to general questions. First we will start with questions received prior to the meeting. I call on the Head of our Investor Relations, Mr. Malcolm Bull, to read them out. We'll answer those ones first before we open it to the floor.
Thanks, Jeffrey. I'll just leave the mic there. I'll probably use the podium.
Yeah.
Good morning, everybody. We have had several questions tabled before the meeting from shareholders, and we thank you very much for those. The first is a question from Cranbourne Capital, 15,000 shares, and Mr. Warren Tuteat, 22,500 shares. A question to you, Jeffrey, on the makeup or future makeup of the board, and verbatim, "Given Clinuvel's stated global expansion goals, does the board have a concrete immediate plan to appoint independent non-executive directors with modern U.S. biopharmaceutical commercial launch and FDA regulatory experience, or will the board remain as it is?
No, I am sure the board will not remain as it is. It is a question of timeline, and we definitely will look at appointing new directors from the U.S.A., should we be listed on Nasdaq. We do have the skills, a broad range of skills on the board currently, covering all aspects of our business. But I think we certainly have the expertise on the pharmaceutical side on our board, including dealing with the U.S. system, and not only on our board, but our executive as well, of course, dealing with the FDA. So we have the requisite expertise in that area, but we could boost our board expertise on the business investment side of the U.S., North American market if we are listed on Nasdaq. I think you will see that happening. So the board is not static, and more news will follow.
Thank you, Jeffrey. Philippe, a question for you from Mr. Hristos Spanos, who has over 18,000 shares. "Can someone please explain," and Philippe, that is you, "the current ASX share price, which has receded over 10 years, especially after reaching a high of AUD 42, following the predominantly global acceptance and marketing of SCENESSE, why the current board decided to change its group holding structure and seek a listing of its ordinary shares on the Nasdaq and delist from the ASX, with preference for a foreign holding company, which would become the new parent company of Clinuvel, a decision that seems to have resulted in a persistent share price decline, affecting all investors?
That is a lot. You will have to read it back to me. I find it is and I have done it once, and I do not think I would want to fall in the trap again. I do not want executives to talk about share price in public companies. I find that unsavory. I understand the underlying tenor of the question is the value gap that is opening up between the current market cap and the cash-backed assets the company has, and the perceived value that the company should command. I would say to you the following. My observation, and I try to divorce myself from the company once in a while, is that we operate in a buoyant market in Australia that is not used to invest in biotechnology companies, although we have quite a number listed on the ASX.
We are very good at other things and putting our money towards other sectors, but biotech is not our forte. There are some winners, but there are also a number of losers, and the fact that a number of companies fail their trajectory lingers on in the minds of many investors. I call that the fear factor. What surprised me around Clinuvel that I've never understood fully, because I compare Australia to the rest of the world, is that in November 2021, one analyst started devoting a special report on the alleged future competition of Clinuvel. I don't see that too much in other jurisdictions, where one analyst focuses a whole report on the competition. At the time, it was very early stages, phase I, phase II. Our response to investors who asked us that, and to the analysts as well, "Are you certain?
Have you fact-checked what would happen?" We're now five years further, and that competition has never emerged. But from that moment on, the fear was seeded in institutional Australia. They said, "Oh my goodness, we've got a single platform, single product company with emerging competition." My answer to you, and has been over the last five years, competition in pharma is usual business. I don't know any pharmaceutical that does not. Actually, the perverse truth is, competition actually can increase the markets and the prices. To become in a defensive state as a company, to talk about competition all the time, is, I would say Australian-owned. We don't have the discussion with U.S. institutional investors. If fear and greed sentiments drive the markets, and fear beholdens investors, it's very difficult to get it out of them.
While everyone was talking about competition and was focused on it, the first one emerging in phase II, and the second one in another phase II, and then the one leading to phase III, one missing the endpoints of phase II, the other one getting rejection from the FDA, the company grew. This is not just an empty slogan. What I'm saying to you is, mathematically, if competition is such a big issue in the minds of some investors, how is it possible that while two companies are running clinical II and III trials, recruiting patients, that the incumbent is still growing? The only logical conclusion is that the market is large enough to bear three acting parties. So, it has genuinely never been an issue to us, and we are still growing.
The answer to Mr. Spanos is, share prices can have wild fluctuations on industry, as you have seen with Clinuvel. On one day, we commanded a market cap of AUD 2.3 billion, a PE value of 210.
I remember, and I think I shared that anecdote with you, there was a smart investor, a Greek investor in London, who called me on the day, and he said to me, and I remember that vividly, "You are a rock star." My answer to him was, "First of all, it's not a single man pro-- If there are rock stars, it's my whole team." But I said, "I don't want to hear that word because it's an irrational valuation that cannot be supported." The answer to him was, "The share price has nothing to do with us." On both ends of the spectrum, there is exuberance and there is perceived fear, which has nothing to do with the value, the underlying value you're trying to build in the company.
The answer to Mr. Spanos, I don't have an explanation to an overly appreciating or declining share price.
This is a bit related, Philippe, but Mr. Zillen Wee, who's got 1,200 plus shares, is a bit concerned about the deliberations of the board on the potential listing on the Nasdaq and delisting on the ASX. He says to me, "It seems it may be doing more harm than good at the moment to intrinsic value." Is management and the board considering the costs and benefits fully? Because he says, "Mr. Market is unpredictable." But maybe you can explain a little bit more about how you're approaching the deliberations, and where we're heading. Although it's ahead of a release next week, so keep in mind that very point.
Very few words, but yes. I've talked too long and too much. The issue of listing on a U.S. exchange, and Mr. Wee connects it to value, and I want to disconnect it, I want to decouple it. A company seeking value elsewhere is, in my view, a bad motivation. You need to direct, and we had a discussion with the analysts yesterday on the same topic, is where do you believe the future operations, the future business are going to emerge? What is your largest market that you're trying to plan, that you're putting your money towards? Where is the biggest talent pool? Where are your revenues generated now as opposed to the past? The answer all is North America. The largest pharmaceutical market with understanding of peptides, polymers, long-acting ingredients, to my chagrin, is still North America.
That has nothing to do, that decision has nothing to do with value. We would make the same decision, and you will hear that next week, if the share price would double or triple. It is where do you need to locate your business to succeed where you believe you're going to succeed in the future.
Okay. So some specific product questions, and don't get too comfortable, Philippe, we're going to come back to you. This is from Mr. Tuteat and Cranbourne Capital related to NEURACTHEL. So given NEURACTHEL Instant is being advanced via a bioequivalence pathway in Europe, what specific clinical or manufacturing data changes are required to clear the vastly more stringent U.S. FDA regulatory framework for a U.S. launch? And I'll give you the second one actually as well. Given the recent filing for NEURACTHEL Instant, what's the calendar timeline for commencing phase I, phase II clinical studies for the more significant commercially modified release formulation? So, clinical manufacturing data changes required to launch in the U.S., and for modified release, clinical studies we may have to undertake to get to market.
First, I need to simplify it for the room and for the viewers at home. NEURACTHEL is based on a large 24 amino acid molecule. It's a mesmerizing story because and it's called ACTH. ACTH came to the U.S. markets in 1952, and it can be used for 19 different diseases. In lay terms, it is the equivalent of a corticosteroid without the bad side effects. So ACTH does a lot. It's a very versatile molecule. Why did we do it? Because we understood afamelanotide, and afamelanotide is a cleavage of ACTH. If you put your scissor in ACTH, you get our afamelanotide. So ACTH is part of the family of molecules. That's the rationale. What was and what is the strategy?
We looked at the underserved market of ACTH in the U.S. and Europe, because the major player went into receivership and then ANI took over, and that has a small sliver of the pie. And we said, "Well, this is an opportunity, and it's also something we understand and we're good at." And in the diversification quest, we said, "ACTH, NEURACTHEL, it's a branded name, is going to be our first instant release generic product." The path of least resistance was in Europe because these countries have already accepted ACTH as a generic. What the honorable member here asks is, the stringent requirements in the FDA. The FDA doesn't have more stringent requirements than the EMA.
The only notable difference between the European Medicines Agency and the FDA when it comes to generics is that they want you as a drug developer to test the product against an existing reference standard, a reference product. Since there are a number of generics in the U.S., our next step is to take that reference product and analyze NEURACTHEL against it. When the member talks about phase I and II, that is not correct because once you have done that and you built your dossier with these data, in other words, you're saying, "The product we are proposing to you, regulatory authority, FDA, is equivalent, bioequivalent to the product that's already on the market." That is the process. For that, you need one study that's called a pharmacokinetic or dynamic study.
In lay terms, you need to inject healthy volunteers, preferably 12, with your product and make sure that it's safe and that it gives the same blood concentrations as the product already on the market. There are a number of steps that the U.S. require over and above the EMA. But that is the only difference.
Okay. Last one from Mr. Pat Kitko, who has over 58,000 shares. It's a long question, so I have to read it. It's to you, Philippe. "Some of us shareholders have held shares for more than 15 years, and we've placed our trust in the company and its long-term vision." Very appropriately so. "Could management please advise a more detailed update on what's been achieved to date with two specific product formulations, CUV9900 and VLRX001, including the specific commercial progress made over the past decade, and what shareholders can realistically expect to see from these second-generation melanocortins over the next one, two, three, or five years?" He's saying, "There appears to be prescription products with at least one involving a topical formulation.
Can you clarify the intended therapeutic applications for these molecules, specifically, and we may not be able to be specific on the longer-term application to potential conditions which have been mentioned or have not been mentioned?" Nice and long.
That's the last one, I hope.
I'll leave it there so you can refer to it.
All right. So what Mr. Pat Kitko is asking, again, I'm going to translate it in lay terms. Remember, we talked about ACTH, which is a molecule of 24 strings of pearls. You cut the first 13 pearls, and you end up in afamelanotide. And if you put your scissors in afamelanotide, you find the minimally active component, six amino acids, from 24 to 13 to six. And when you do that, you start off with a large molecule, a smaller molecule, and an even smaller molecule. Very simple, and it is that simple.
In many of these meetings, I've said to you candidly, without reservation, the holy grail of the cosmetic industry ever since three decades I looked at it, has been, can they, the cosmetic conglomerates, take the melanocortin molecule with its attributes and use it as a cream, formulate it in a cream, and self-tan a human being? That has been the quest. It's the grail. It is the ultimate prize. That's how this company started. It's a tanning company, Epitan. And none of the cosmetic companies and two pharmaceutical companies have ever succeeded in doing that. There's a reason why. And there comes this emerging Australian company and say, "Well, we're going to have a crack at it. We think we can do it." We were justified, and we are justified in thinking this because we're using that mechanism as an injection to provoke, to activate the tanning mechanism.
Our challenge was understanding these peptides and polymers and excipients, ingredients, can we push these peptides through the skin to activate the same mechanism? The belief in the industry is, if you succeed in doing this, you have got a whole new sector. You have got a whole new domain of self-bronzing, self-tanning products. We formulated for decades, and we saw results. We also said to ourselves, "What constitutes a commercially viable or commercially successful product?" I make a provision here, and allow me for doing this, is that we believe that that product ultimately would be used more by women than by men. The self-bronzing of the face, the embellishment of the face, would have predominantly first a female audience and then a male audience. We can debate about it.
Sometimes you can say, "Well, the male cosmetic industry is also emerging." But by and large, we first say to ourselves, "What does a successful cosmetic transdermal product need to do?" It needs to be applied twice a day, in the morning and in the evening, to provoke that kind of effect. So keep in mind what we are doing as an injectable, we are injecting it once every two months to activate the same cell in our skin to give that result. But that is systemically.
It is sitting in your circulation, in every single blood cell, attaching to every single skin cell. So you are tanning from top to toe. When you use a topical melanocortin, you are seeking a local regional effect. It is only on the place where you are going to apply it. You cannot marinate your entire body surface in these melanocortins because it is not feasible.
A product that needs to be applied 6x a day may be academically interesting, but it is not commercially. That is at the stage we are at. The answer to Mr. Pat Kitko is, we are working towards it with some results, but they are not yet commercially viable. At the same time, there is a marketing question, a distribution question to be answered, and that is a really unpopular theme also amongst the professionals I meet in the cosmetic industry. Even if we collectively, in our business, would have that product today, we do not sincerely believe that it would be a commercial success because the marketing power is not yet behind it. Marketing is getting a celebrity, the influencers, social media activated to talk and disseminate the news, the knowledge about a product. We have a parallel track.
We complete our development, we keep optimizing the formulation while we prepare a marketing story, engage whether there is genuinely a demand for it, and that is what you see from us in some of the magazines and the forums. There is an ambition. On a good day, you would say, "Is it not overly ambitious?" My answer to you is, it is not our core business, but it certainly belongs to us. On a bad day, you would say, "Well, are you ever going to succeed?" My answer to my team who ask me the same question is following. How is it possible that we shoot out rockets in space to the next planets, we destroy the rockets, and the remnants end up in the sea? But there is one guy that says he can formulate a rocket to make it land on its own feet.
The word impossible doesn't enter my equation unless it is scientifically not possible, and we are far away from that point. I hope I've answered that question.
Good analogy. Mr. Chair?
No more questions.
No? Take them to the floor now?
Well, we now turn to general questions. We call on shareholders in the room to ask questions. I remind you, please raise your hand. If I call on you, please raise your voting or non-voting attendance card prior to speaking to identify yourself as a shareholder. Please state your name and the number of shares that you hold. If you are acting as a proxy, please state clearly who you are appointed to represent when introducing yourself to the meeting. The floor is open. Yes, sir.
Sorry.
Thank you. Thanks for the opportunity. John Cunning's my name. I've got a few-
I'm not sure if that microphone's on. Is it?
Yes. John Cunning's my name. I've got a few thousand shares. I've missed the last couple of meetings. Sorry about that. I think I asked at the meeting that I was at a few years ago about the, and it relates to your last question, the cosmetic products. I think you had a product called CYACÊLLE. I wonder what happened to that product. I'm thinking of this not from the idea of finding a magical tanning product, but in this country where I've lived with fair skin for a lot of years, I'm thinking about protection and sunscreen and personal protection. It's a different motivation, I guess. I wonder what had happened to that product. I thought it was going to be available. I would have been keen to have acquired some.
I thought it was going to be available soon, but it doesn't look like it's happening. It only seems to be available in the U.K., where the sun doesn't shine.
Thanks for the question. That's an important one. I might ask Philippe to answer that.
We formulated what we called a polychromatic sunscreen. What does that mean, polychromatic? Most sunscreens available on the market, I say most, the overwhelming majority, shield against UVA and UVB. The first question arises, well, why does a pharmaceutical company need to develop a polychromatic sunscreen? And polychromatic means it goes beyond UVA and UVB. It also protects in the visible spectrum. We made that a small scale as part of the overall marketing plan to launch our melanocortin-containing products. They're called the M1 and M2 line. At small scale, we made it available to focus groups and patients, but we haven't launched it globally because it needs the same marketing machine, it needs the same kind of marketing AUD as we are planning for the M1 and M2 line. We've never put it in larger production yet, is the answer.
But we had feedback on its efficacy, and that's valuable. Next.
Yes, sir.
Ray Tollefson, also a member of Team Invest, which Malcolm has been very good at engaging us with. I don't know how many shares I own because I've been buying them more and more.
That's good.
Can't remember what the latest total is.
We are pleased to hear that.
Just on NEURACTHEL, once it becomes commercially available and in time, how do you expect the annual revenue from that to compare with what, say, is EPP or SCENESSE at the moment? In other words, what scale is it likely to be at?
Do you want to take that, Philippe?
NEURACTHEL, that ACTH molecule, does two things. It is used as a diagnostic. So when we inject NEURACTHEL in you and I, as a diagnostic, we are trying to look at the pituitary function, the function of a part of the brain that steers our hormonal system. And you use that as a diagnostic to know, according to the cortisol reaction that we all have, whether there is a pituitary dysfunction or tumor. And that is used in many countries. That is a diagnostic market that is relatively small but stable. Then there is a therapeutic market I talked about, is you can use ACTH, it is being used in the world, to treat central nervous system disorders like multiple sclerosis, infantile spasms, babies, infants that have epileptic fits. There are 19 indications that are suitable for ACTH. We have market numbers on the size of the pie.
We have never disclosed it yet because we have filed first in three European countries and then the U.K. and then the U.S. The moment we have filed in the U.K. and U.S., we will disclose that. It is a sizable market, and the benchmark for every analyst that writes about it is ANI Pharmaceuticals in the U.S. that monopolizes at the moment the ACTH market. In terms of size, I would say it's a multiple of EPP.
Thanks.
Yes, sir.
My name is Steve Longasik. Thank you. Is that turned on or not? No, it's on. My name's Steve Longasik. I've only got a few thousand shares, but it's important to me. I've had them for quite a while. I don't doubt what you as a company are doing. You position yourself in a strong financial position, which is great, but what's relative to shareholders is what the share price is. There's been, as you're well aware, a downward trend for a considerable amount of time. To the layman like myself, I would put that down, this might be more of a comment than a question, that- Although you've got a pipeline of products which you're bringing out, which we all hear about, when they fall by the wayside, we don't really know much about it. It just seems to disappear.
There's not that much communication put out, and that may be reflective of the share price because people lose confidence. If they do ask a question, sometimes it goes unanswered. Quite often it goes unanswered. That just undermines the whole confidence in the company and its share price. I would really like to see that turn around, please, and have better communications. If something is proposed, and if they are proposed, if you can provide a timeline. I know you can't put an exact timeline, but an approximate. If you're not going to meet that timeline, put something out and say, "We are not meeting this timeline due to the fact that it's getting held up here or here or here," and that will help restore confidence.
I think it's a very fair comment. The first one is about communication timelines. There is a consistent line of communication, and I will repeat it again today, so that we have it perpetualized and on record. As part of risk management, what do these biotechs do? They diversify early on. We focused and diversified later on. What does diversification mean? It means that, and it's a nasty word, but it's used a lot in the investment circles. We take a bet, we take a gamble on technology, and the bet reflects a number of indications, a number of molecules, hoping that one will come to market. I'm somehow against that principle, because if you've got the size of Pfizer or CYACÊLLE, you can take multiple bets. You've got the whole army of people, if they stay, hoping that one of them will succeed.
What we have done consistently and communicated, perhaps not overly well, is that you take a bet with the scientific knowledge and data you have, for instance, XP or stroke. There is a scientific hypothesis that drugs could work in it. There is support, there's evidence for it. But when the data are not strong enough, we say over two decades to you, to shareholders, if there is no compelling reason to continue, and that's expressed in two words in regulatory authority minds. So you and I are now playing a reverse role. We're trying to develop a drug, but how is the counterparty going to respond to your data? The two words are significant benefit. So if you and I are in the business of developing a drug, and the drug does what we think, the benefit is good, it's not significant. It is not overly exuberant.
It is not so overwhelming that it dwarfs the efficacy of other products. Then we said as a board, the chances of coming to market, you might get regulatory approval. You will never get insurance reimbursement, but the insurance will not pay for a drug that does not provide a significant benefit, but a moderate or low benefit. We abort the program. In stroke, we had good results. They were not excellent. How will you compete with anti-clotting agents on the market? That saves you and I a lot of research dollars because you take the decision early on. What we said as a second part of the strategy, and I stand by that, is that you don't need the proof of principle in hundreds of patients in phase II. You need only six or 12.
But what you need to do with the six or 12 patients, you need to increase the pool of data that you get from these patients. If the starting point is that the results are not significant, overwhelming, you stand no chance in getting reimbursement in Europe and U.S. You have to abort the program. You won't be able to compete. That is owned to this company. I am fully aware that we act very differently than most companies that just go full blast and throttle on all the indications, and only one comes to the market. My question to you is, who's going to pay for that? If you and I had the certainty that hundreds of millions of AUD would be available for Clinuvel, you might risk it. I don't think so. Communication, we could have done better.
Timelines, as you have seen today, when there is an adjustment, we will give it to you. Sometimes we had delays. We couldn't disclose it because it's commercially sensitive. In a company that is uniquely dependent on the supply chain, a very thin supply chain, you better be careful what you load in information in the public company. In the private company, it's easier. I take your critique on board, but it's good that you're still there. Thank you.
I mean, just to add to that, I think our communications are pretty good, compared with a lot of other companies. Let me finish. We put out a lot of information in our letters to shareholders, coming from me and Philippe and other members of the scientific team, putting out information on the work they're doing. We try and feature our staff in that way and show their expertise. There are blogs, there are many investor meetings that we have internationally and here, particularly in Sydney. We have Malcolm Bull, who is a fantastic investor relations man. When you say your queries are not answered, I find that surprising because Malcolm, when queries go to him, which is the appropriate initial point of contact, he is assiduous in answering those individuals in person. I don't agree with you.
I mean, that's your perception, but it's not my perception. I will take it on board. We take on board your criticism and, yeah, we note it and we'll try and do better.
Can I just comment? It is a criticism, but also, like I say, it's a comment. Without a doubt, like I say, I don't undermine what you guys are doing professionally as far as products go and whatever, but there's definitely a trend in the share price which has gone down, and you got to put that down to confidence.
Absolutely.
The product line, when you feel that it's not financially, sorry, when you have a product and you actually think that it's not financially feasible and you abort it, that's clever. I think that's good. But as an investor, somebody who's bought possibly some shares thinking, "Well, they're going to launch this product," and then it disappears by the wayside, I guess they need to know the information or why it's being aborted and it's not financially viable, if that makes sense.
Yeah. Okay, we take it.
We really need to try and restore some confidence.
Yep, we take it on board, and hopefully some confidence will be restored after today's meeting by all the listeners and you in the room. I mean, we're giving you some potentially good news for what's to come. But I think, I would say that investing in Clinuvel is a long-term prospect. It's not quick returns because we're dealing with biomedical research that takes years, as Philippe has said. And it's an unpredictable business, as Philippe has said, so there is risk involved, of course.
But at the same time, you invest for the future.
Yeah
How far is the future extended?
Well, we've given you rough timelines, and we work to those, but sometimes the timelines have to extend because that's the nature of biomedical research and pharmaceutical research.
Well, it is, but even in relation to the going on to the American market.
and how you have released some information. I know you are going to release some more, but to release some and not all, like we do not know where we stand currently in regards to our shares and how that is going to transfer across. It would be good if all that information was released together.
I am trying to read what you say between the lines, and it is good, it is eternalized. I am going to say a few things about this, and I hope that I indirectly answer you. What I expect when I invest in a public company, for myself, is that I read and I reflect on what a pool of people are doing. We live in a society where we are more or less attracted by a figurehead, a leader, and we vote on a leader of parliament, a leader of a business. I do not subscribe to it. What I try to do when I go to annual reports and look at my portfolio is I am trying to decipher where the company is going and how it is behaving.
What we have done over 22 years, we have done a lot of things wrong, but what we have done consistently and well, and I say that with some objectivity, is we have told you exactly what the challenges are, the risks, and how we mitigate it. At the same time, we are one of the very, very few biotechs that issues dividends. The question that should be posed is, why does a biotech that needs its development funding issue dividends?
We said it a few times, and maybe you have to say it more often, you issue dividends because you want to pay gratitude. That is my firm belief, although I am not in favor of dividends. But if someone takes the time to invest in the company for five, 10, 15 years, that person needs attention because it is a big ask. Which industry asks investors to stay 10, 15 years?
I am fully aware of that, and we have a third of a register that does that. So you pay tribute to these investors by issuing them 10% of your net profits a year. That is one sign of our behavior. The second sign of our behavior is, we said to you. I remember a large, and he is still there, a large Swiss holder, he said in 2010, "Oh my God, you are going to dilute us every year." I said, "No, we will not." We have not diluted you for 10 years. That is behavior. You need to add the Steve Jobs dots and connect them and say, "How is company operating?
Is there consistency in what they say or is it paying lip service?" The answer is, there is a very strong line of what we believe a public company should be doing and what it should not be doing, even though it doesn't befit our industry. A profitable biotech belongs to less than six percent of the global biotechs on purpose. We could replow all our funds in R&D and have multiple shots at goal, but it's contrary to our business beliefs. If the inherent question, the implied question that you and your associates have is, what will the company do with the shareholders? It would be not akin to our behavior not to protect you in the transition. It would be out of character of this company after 20 years, if you follow how we behaved, to do something unexpectedly surprising or that is not in your interest.
I say that not only as MD, because I'm the largest shareholder in this company. So, confidence is a big word. Confidence is a fleeting, also volatile world, because it can come in one day and can go in the other. It's based like a director of this last movie. His last movie is great, but not his entire portfolio. We have a plan, we're executing it. It is not dogmatic, it's not inflexible, but it needs to be executed because it is in the best interest of what we do. Now, if at the very last minute when you land your aircraft at final approach, you believe you shouldn't land, we will abort it. So confidence is by analyzing, reflecting, and looking at the long-term direction of a company. Now, if we did something totally out of character, I fully subscribe to your critique and your comments.
I take it well. By and large, and I add because it may be the last time we speak together in face-to-face, there are practices in Australia, but worldwide, that I don't subscribe to social media. When I follow a company and I invest in the company, I have two choices. I want the best for that company, I support it. I've been critical about it. I'm not the person that would write letters to a management board, but that's your right. But the last thing I would do, because that's something that I've never understood in Australia, but it happens in the U.S. and Europe, so don't take this wrong, it's not Australian, is why would you critique in open forums and social media a company and talk it down? Because social media open forums are read by everyone.
You undermine confidence for the very best that you want. It's so contrary to what we all should be doing. So, it's something that I never understand. I don't need to understand everything. What I say to you is analyze a company or what they do longitudinally, and then there may be a trend. Thank you.
All right. Thanks, Philippe. Any other questions? Well, looks like we are done and dusted. Ladies and gentlemen, that concludes the shareholder Q&A. We will announce the results later today on the ASX market announcements platform, and this concludes the meeting. I thank all those in attendance.