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FRONT COVER: GROWTH AND EXPANSION
CLINUVEL is well positioned to build on its established
commercial and research and development operations.
The Company is expanding access to its drug SCENESSE®
(afamelanotide 16mg)
for patients with erythropoietic
protoporphyria in Europe and the USA, as well as new
jurisdictions, subject to regulatory approval and agreement
on reimbursement. Drawing on expertise developed in the
role of melanocortin drugs – including afamelanotide – in the
body, CLINUVEL has expanded its research and development
program focussed on SCENESSE® and new molecules to
treat multiple patient groups with severe genetic, skin, and
systemic disorders. CLINUVEL is on a growth and expansion
path to build a diversified and integrated biopharmaceutical
business.
CONTENTS
2
Performance
Overview
4
Mission, Vision
& Values
6
Chair's Letter
8
Media, Events &
Peer Reviews
9
Managing
Director's
Letter
24
Directors'
Report
51
Statement of
Cash Flows
72
Independent
Auditor's
Report
13
CLINUVEL
in the New
World Order
17
Innovation in
DNA Repair
22
Singapore
RDI Centre
36
Remuneration
Report
49
Statement of
Comprehensive
Income
50
Statement
of Financial
Position
52
Statement
of Changes
in Equity
77
Shareholder
Information
53
Notes to the
Financial
Statements
80
Market
Performance
71
Directors'
Declaration
81
Glossary
1
FIFTEEN YEAR PERFORMANCE
OVERVIEW
CLINUVEL completed its fourth full year of commercial operations
in the financial year ending 30 June 2020, recording a fourth
consecutive annual profit and declaring a third consecutive annual
dividend.
A STORY OF STRATEGIC FOCUS
Over the last fifteen years, CLINUVEL has implemented a deliberate
and focused strategy to develop and commercialise one lead drug
embodying a novel technology, for an unmet need. CLINUVEL
has delivered on the strategic objective set in 2005 to develop
and commercialise SCENESSE® (afamelanotide 16mg), which has
been approved and launched for adult patients with erythropoietic
protoporphyria (EPP) in Europe and the USA.
Over the financial years 2005 to 2016, CLINUVEL’s operations were
research and development (R&D) focussed. During this R&D phase,
expenses exceeded revenues as SCENESSE® was developed;
clinical studies undertaken and completed; and
regulatory
approvals, sought and obtained. To finance the business during
this time, over A$94m was raised from capital markets in several
installments. CLINUVEL’s last capital raising was in March 2016.
COMMERCIALISATION HAS DRIVEN REVENUES,
PROFITS AND CASH RESERVES
Commercial operations commenced in Europe in June 2016
following the granting of marketing authorisation by the European
Commission in 2014. In the first full year of commercial operations,
FY2017, the Company’s first net profit after tax of A$7.1 million was
recorded. This outcome was achieved at a higher level in FY2018
(A$13.2 million) and in FY2019 (A$18.1 million), which was a record
annual profit. Revenues from operations rose by 5% in FY2020 and
there was a deliberate and controlled rise of 44% in expenditure
to support the expansion of the Group’s activities, including
establishing commercial infrastructure in the USA following the
approval of SCENESSE® by the US Food and Drug Administration
(FDA). The Group delivered its fourth consecutive annual profit in
FY2020 of A$16.6 million. This is a positive outcome, achieved
as the world has been adversely impacted by the coronavirus
pandemic and resulting significant economic contraction in the
second half of the year.
Financial Performance, 2005 to 2020, A$m
Financial Performance, 2005 to 2020, $Am
R&D, Pre-Commercial Phase
Commercial Phase
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
-10.0
-20.0
-30.0
Expenses
Revenues
Net Profit
Cash Reserves
Financial years ending 30 June, revenues include all other income, cash reserves are cash & cash equivalents, net profit after tax
The Company has maintained a disciplined and conservative
approach to resource management throughout its development
cycle and over the last four years of commercial operations,
ensuring that it is capable of withstanding global downturns,
removing the need to raise capital in adverse markets and allowing
Shareholder Returns
the Group to self-finance its planned expansion and growth.
The rise in cash reserves to A$66.7 million as of 30 June 2020
represents a 44% annual compound growth rate since the last
capital raising in March 2016. This level of cash reserves covers
more than three years of the Group’s FY2020 expenses.
2
40
30
20
10
0
-10
-20
2016
2017
2018
2019
2020
Return on Equity, %
Earnings per Share, cents
Financial Performance, 2005 to 2020, A$m
R&D, Pre-Commercial Phase
Commercial Phase
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Performance Overview
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
-10.0
-20.0
-30.0
RETURNS TO SHAREHOLDERS
Given the level of cash reserves accumulated, the Board has been
able to show its appreciation for the support of shareholders over
the R&D phase of operations and into the commercial phase by
declaring an unfranked dividend in each of the last three financial
years – A$0.02 following FY2018 and A$0.025 after each of FY2019
and FY2020. As a company with positive annual net cash flow and
profitability, CLINUVEL has provided shareholders with a positive
return on equity and earnings per share over the last four years –
23% and 33.8 Australian cents, respectively in FY2020.
Revenues
Expenses
Net Profit
Cash Reserves
MILESTONE FDA DECISION
FY2020 is notable for the October 2019 milestone decision of the
US FDA to approve SCENESSE® for the increase of ‘pain-free’ light
exposure in adult EPP patients with a history of phototoxicity. Within
six months of this approval, CLINUVEL commenced first treatment
of US patients in April 2020 enabling first US revenues in FY2020.
CLINUVEL is committed to providing EPP patients worldwide with
access to treatment and is actively pursuing regulatory approvals in
other jurisdictions.
Financial years ending 30 June, revenues include all other income, cash reserves are cash & cash equivalents, net profit after tax
40
30
20
10
0
-10
-20
Shareholder Returns
Shareholder Returns
2016
2017
2018
2019
2020
Return on Equity, %
Earnings per Share, cents
Approvals from the world’s leading regulatory bodies in the USA
and Europe – validating the positive safety profile of SCENESSE® -
enable the expansion and increase in pace of the Group’s product
development pipeline. CLINUVEL has identified other indications
where afamelanotide may provide clinical benefit to patients. This
is central to the evolution of the Group’s strategy to become a
diversified biopharmaceutical company providing treatments to
multiple patient groups. The feature in this report on Innovation in
DNA Repair explains a key path to this objective.
SUMMARY
CLINUVEL is a dynamic biopharmaceutical group of companies
that has developed and commercialised a novel treatment from
laboratory bench to patient treatment, with a track record of positive
cash flow and profit since the commencement of commercial
operations. This is an achievement of which stakeholders can be
proud. This Annual Report provides more detail on the result for
FY2020, how it was achieved and the strategies of the Group to
grow and expand its activities.
FY2020 Summary
Total Revenues and Other
Income
Net Profit After Tax
Cash and Cash Equivalents
A$33.9 Million
A$16.6 Million
A$66.7 Million
Cash Cover and Current
Ratio
Return on Equity
Earnings Per Share
3.2x and 11.3x
23%
33.8 Cents
3
Total Revenues and Other IncomeNet Profit After TaxCash and Cash EquivalentsCash Cover and Current RatioReturn on EquityEarnings Per ShareA$33.9 MillionA$16.6 MillionFY2020 SummaryA$66.7 Million3.2x and 11.3x23%33.8 CentsTotal Revenues and Other IncomeNet Profit After TaxCash and Cash EquivalentsCash Cover and Current RatioReturn on EquityEarnings Per ShareA$33.9 MillionA$16.6 MillionFY2020 SummaryA$66.7 Million3.2x and 11.3x23%33.8 Cents CLINUVEL’S MISSION
The CLINUVEL Group works to translate scientific
concepts and breakthroughs
into commercial
products.
We are determined in our desire to excel scientific
research and development, building on our global
expertise to deliver lifelong care and novel products
for patients and consumers.
The CLINUVEL Group places much emphasis on
its People and Environment as central to all of the
Group’s working practise. CLINUVEL Group focuses
its research and development on genetic metabolic
and diseases not yet addressed, aiming to deliver
innovative medical solutions for complex problems.
CLINUVEL’S VISION
Innovating novel solutions for unmet patient and
healthcare needs.
CLINUVEL’S VALUES
PEOPLE & ENVIRONMENT
We work for physicians, consumers and our stakeholders. We are selective and invest
time in the talent we employ. We aspire to create an environment where professionals
are able to develop and grow. We aim to present skilled talent with early opportunities,
responsibilities and accountability as part of training the next generation. We strive to build
international teams and operate on the basis of gender and ethnic equality. We wish to set
an example of excellence in our industry.
TECHNOLOGY
We create, develop, and advance products which are driven by medical need, consumer
demand or lack of available solutions. Our technologies aim to add value beyond existing
offerings. We acknowledge that new technologies require regulatory environments to be
primed and markets to be prepared for achieving widespread acceptance and adoption.
APPROACH
We aim to be innovative in our approach and find solutions for unique, complex and
previously neglected healthcare problems. We are determined to remain leaders in our field
of expertise, and be creative and diligent in all our endeavours. We admit errors, recognise
our shortfalls, evaluate, analyse and learn to implement new findings. In improving ourselves
we strive to enhance the lives and quality of life of those we serve. We are vigilant not to
become complacent and recognise that success can only come from the identification
and mastering of obstacles. Our staff are optimistic and focused.
RESPECT & APPRECIATION
We are conscious of the privilege to be productive during our professional lives. We
appreciate the significance of being able to function in good health and we value this gift
every day. We aim to be sincere in our approach and represent data and facts. We act
respectfully and do not harm others. We value our colleagues and co-workers and cherish
diversity, equality, respect and harmony. We are passionate towards our objectives and
share empathy and compassion for all those we work to serve.
KNOWLEDGE BUILDING & SHARING
We are experts in optical physics, the interaction of light and human biology, and proficient
in our understanding of rare disorders and skin care. We advance our ideas and concepts
and translate them into effective and practical solutions. We aim to grow our knowhow
continuously and establish a learned community. Collaboratively we seek to excel in a
multifaceted field to arrive at scientific breakthroughs.
CHAIR'S LETTER
Dear Shareholders,
Which expert
in business could have
predicted the year 2020? The question is,
were we caught by surprise and could we
have managed ourselves better? The year
2020, my first complete year as Chairman
of CLINUVEL, has been overshadowed by
the impact of COVID-19, and has therefore seen my main tasks
change, helping navigate CLINUVEL during these uncertain times.
The financial year was one of two halves. In the first half,
CLINUVEL’s goal was to provide continued growth in Europe and
to progress our product development pipeline. We concluded the
year on a high, with a unique milestone on 8 October 2019, which
was the approval by the US Food and Drug Administration (FDA) to
make SCENESSE® (afamelanotide 16mg) available in the USA to
adult EPP patients. We shared our celebration at the 2019 Annual
General Meeting (AGM).
With much optimism, we looked forward to expanding the business
into the USA, progressing our product development pipeline as
we started the second half of the 2020 financial year. In January
2020, our IR Manager, Malcolm Bull, came back with considerable
optimism from the JP Morgan Global Healthcare Conference in
San Francisco. Then suddenly, a dramatic turn of events which
turned the world upside down. In this new world, making sure
that all checks and balances were crossed, my priorities became
threefold: to oversee the governance and leadership, to optimise
the financial management, and to make sure unique people with
great knowledge would continue with this Company.
GOVERNANCE AND LEADERSHIP
I was asked how I identify executive managers to run my portfolio
of companies. In my own publicly listed company BSGR, I have
recently appointed a new CEO who is stress-resistant and
fully understands the art of managing people to maximise their
skillsets. Captains of industries are truly identified when they face
changing environments and are forced to act. Therefore, this past
year was particularly important to closely watch how CLINUVEL’s
senior managers would handle the crises and take the most
suitable measures. Entrepreneurship is much more than running
successful companies when all things are going well. I expect
senior management to find creative solutions, come up with
ideas on how to progress a company and, above all, dare to take
unpopular measures to retain value. In the past year I have again
seen proof of CLINUVEL’s leadership, who managed the complex
world of pharmaceuticals when maneuvering was really needed.
At a time when the world went in lockdown and hospitals decided
to put COVID first and other healthcare services second, our team
managed to maintain supply and maintain SCENESSE® treatment.
With respect to governance, the Board sets clear goals. We have
split the role of the CEO and Chairman. We did not just delegate all
In CLINUVEL, we have passed
more than a decade of independent
audits without remarkable findings.
the responsibilities to one person, helping the Managing Director
get on with his daily job of running the Company and leave the
supervisory matters to myself, as well as the coordination of Board
matters. In many listed companies the roles are still combined, but
I think it is not a wise way of running companies.
I see success in business as a simple formula which has always
worked for my companies and most successful colleagues. First,
always make sure you spend less than you receive. Second,
formulate a clear vision and work consistently towards this goal.
Third, treat the people working around you with respect and they
will do the same through putting in maximum effort. With our
current CEO, we see all three.
Effective leadership is not just one person, but it is a culture
created where collaboration takes place across all managers on
the floor and business partners without issues or friction. In this
interplay, the CEO then needs to integrate a mix of long term and
new employees, guarantee diversity, possess a depth of skills and
experience and report progress to go through all bottlenecks. In
the last 12 months, we have expanded our workforce considerably
and are all working to achieve a list of our key objectives.
FINANCIAL LEADERSHIP
What is financial leadership and why does it matter? The worst
business one can arrive in is a business where processes are
lacking, expenditures are varying, and little financial control exists
due to high commitments of forced spending. The financial books
of a company are the reflection of managers’ ability to make daily
decisions. CLINUVEL’s books are not coincidental, they follow our
managers’ vision.
It is clear CLINUVEL’s financial
management has been very successful,
both our CFO and CEO protect our
financial position to a maximum.
I always wish to see clean financial processes in the companies
in which I am involved. In CLINUVEL, we have passed more than
a decade of independent audits without remarkable findings. This
helps us concentrate on our operations. The CFO Darren Keamy
has built a strong team over the years and oversees the finances of
all the activities in the subsidiaries and tax. His team is managing
the expansion of VALLAURIX in Singapore, and the currencies
across the Company. As part of the team’s task this year, there was
a need to avoid negative interest rates on the Euro and secure our
working capital.
It is clear CLINUVEL’s financial management has been very
successful, both our CFO and CEO protect our financial position to
a maximum. We need lean companies in this industry, and the way
our management is managing this globally is the modern way to do
it. We shareholders benefit long-term, since no money is leaking,
and no new capital needs to be raised from the markets. I have
seen many investment banks offering to raise money for CLINUVEL
at high discount percentages and praise ourselves that we do not
need to do it.
6
Cash is always king in crises and this year I have seen established
companies going out of business. Many tragedies are affecting
breadwinners and families. With CLINUVEL, we expand and
provide people strong job security, helping our employees feel
safe and motivated. The way our financial team is going about
the business is the right one and as a major shareholder in the
Company, I am grateful that we are rock-steady in management
without unexpected or dramatic events.
For the six months to December 31 we recorded a good profit. At
the end of our audited financial year, we posted a A$16.6 million
profit, whereby our cash reserves have substantially grown. As a
Chairman, I cannot ask more from a team during such a global
financial crisis and am very happy to be involved in such a
Company.
In our senior management team,
we have 57% women and 43%
men, a great balance based on our
CEO’s aim to lead in this field.
CONTINUATION OF SPECIAL KNOWLEDGE
CLINUVEL stands out with a special team of Directors, each of
whom brings special expertise, and an exact gender balance.
CLINUVEL leads many other companies in this balance, showing
our different approach to business. In our senior management
team, we have 57% women and 43% men, a great balance based
on our CEO’s aim to lead in this field.
Chair's Letter
a company for generations to come. Looking back at the progress
this year, we are well on course.
In CLINUVEL, we need special knowledge to grow, and in
Singapore we are increasing our investments each year. This year
we built modern facilities which are featured in subsequent pages
of this report. The Singapore government started to recognise our
investments in the country and our hiring of people to lead the
research of new products.
In March, I shared my vision of the Company’s strategy and in
October our CEO gave a detailed breakdown of how CLINUVEL will
be growing. Philippe has made it clear that he has very little time to
waste to perform with his team, since he wants all objectives of the
Group to be met before he retires from this role. I understand his
ambition is to see the name CLINUVEL strive during his time with
the Company, which translates well for us shareholders. I share his
frustration in a COVID-19 world, but I have confidence in him and
the management team to keep surprising and impressing us, with
their dedication to the Company.
I want to thank the CLINUVEL Board for the great support and
guidance this year, especially during such a peculiar year, but
nonetheless with great highlights.
During these difficult and uncertain
times, we sympathise with all those
affected by COVID-19 and hope all our
stakeholders remain safe and well.
I am a general entrepreneur without special knowledge about
pharmaceutical development, but the same business principles
apply to every one of my ventures. I want to see CLINUVEL keep
its key people and educate new talent for the years to come. In
CLINUVEL, we have become an institution whereby new graduates
have started to apply for jobs since the universities have taken the
CLINUVEL example of running a company in their business cases.
I want to see long-term continuation in an environment where
competitors are trying to emulate our approach. A strong top and
talented below within our levels of hierarchy is the only way to build
IN CONCLUSION
During these difficult and uncertain times, we sympathise with all
those affected by COVID-19 and hope all our stakeholders remain
safe and well. We appreciate the loyalty of our long-term
shareholders and the new shareholders who have joined CUV
during the past year for the ongoing journey. Despite the current
adversity, CLINUVEL’s future is full of optimism and we will continue
to focus without relaxing on the strategic path we have laid out.
This path will lead us to adding value, pride, and satisfaction to all
our stakeholders.
Willem Blijdorp
Chairman
CORPORATE GOVERNANCE
CLINUVEL Pharmaceuticals Ltd and its Board are committed to establishing and achieving the highest standards of corporate
governance. The Company’s Corporate Governance Statement for the year ending 30 June 2020, based on the Australian
Securities Exchange Corporate Governance Council’s (ASXCGC) Corporate Governance Principles and Recommendations, 3rd
Edition, can be found on our website at https://www.clinuvel.com/clinuvel/company-overview/corporate-governance.
7
CLINUVEL IN THE MEDIA
500
Media Pieces
8
Key Events
22
Peer Reviewed
Articles
500
Media Pieces
8
Key Events
22
Peer Reviewed
Articles
Global Distribution of Media Coverage
72
39
33
13
8
376
MANAGING DIRECTOR'S LETTER
Dear Shareholders,
contemplate CLINUVEL’s
INTRODUCTION
I
successful
progress and financial results in 2020 in
contrast with the unforeseen pandemic and
various containment measures unfolding
around the world. It has been a surrealistic
series of events in the past year, the emergence of a new epoch
and existence for all of us. In the vortex of a virus working its way
methodically across all borders and has already stolen 1,000,000
lives around the world, global commerce has slowed down at a
rate far beyond that seen during the Great Recession and has
caused millions of workers to be laid off.
Like most businesses, CLINUVEL was forced to adapt quickly
and plan its operations in a materially different way. First, Brexit
caused us to relocate some of our operations to the European
Economic Area while keeping other services in the UK. We made
this transition successfully and kept adding new services and
structures to EU distribution.
...we were proud to learn in February
that CUV’s Board was one of only
11 on the S&P/ASX-200 where
at least half of the directors were
female, reflecting the progressive and
intentional approach to gender and
cultural spread within the Company.
The past year taught us that limited travel required an indirect
approach to CLINUVEL’s operations, and the curfew and inhibited
ability to enter offices forced the Board and management to rethink
strategy and the future of the Company. Senior management found
itself defending the healthcare needs of the targeted porphyria
patients both in Europe and the US. While some erythropoietic
protoporphyria (EPP) patients could not gain access to treatment
due to closure of specialist hospitals, other centres needed
to be immediately activated to prescribe SCENESSE®. Under
extraordinary circumstances, special permissions were requested
from, and granted by, national competent authorities in the
European Union and the US.
Following the FDA’s approval in October 2019, there has not been
a second to reflect upon – let alone celebrate – the momentous
occasion. Rather, it has been an accelerated path to formulate the
second product PRÉNUMBRA®, contest Ethics Committees and
regulatory authorities, and introduce SCENESSE® to US insurers,
all while expanding the Company on all other fronts. We invested in
new facilities in Singapore, and despite a delay of several months,
were able to open our laboratories on 31 August. With newly
elected Chairman, Mr Willem Blijdorp and the addition of Mrs Sue
Smith and Professor Jeffrey Rosenfeld as Non-Executive Directors
to the Board, new insights, new strategic discussions, and different
practices were introduced. The current Board with Mrs Brenda
Shanahan and Dr Karen Agersborg is well diversified in skills, and
we were proud to learn in February that CUV’s Board was one of
only 11 on the S&P/ASX-200 where at least half of the directors
were female, reflecting the progressive and intentional approach to
gender and cultural spread within the Company.
In terms of cost-efficiency, we have continued to improve with
operating expenditure as a percentage of total revenues reaching
26.9%. We also saw an improvement in our overall return on
invested capital to 14.2% this year (up from 13.7% in 2019). This
performance demonstrates considerable momentum as we enter
2021. We built and kept our balance sheet clean to create options
for the ensuing years, increased our cash reserves by 23% and
expanded the Group with an eye to overall sustainability. Along
a chartered course, our R&D activities gathered momentum to
provide for the next generation of products. I see CLINUVEL’s
output the past year as one of the most memorable achievements
by our dedicated team in the midst of the most severe economic
recession in recent history.
As much as we could, we changed our pharmaceutical product
supply and worked for weeks 24/7 to secure continued distribution.
We witnessed how authorities, distribution centres and customs at
various borders were tapering or shuttering operations all together.
As supply chains slowed down, we were asked to find most original
ways to distribute SCENESSE® under specialised transport,
against the time ticking to get the hormonal therapy to hospitals
on the hour. In March, northern Italy was under siege from COVID,
and many porphyria patients became understandably too anxious
to travel or seek treatment in designated hospitals.
It is an understatement to say 2020 has been quite a test, but not at
any time have I detected a sense of panic or loss of control across
our group of companies. Rather, a silent confidence underpinned
our staff that they would collectively manage the uncertainty even
if it meant accepting some delays. Surprisingly, during the global
lockdown there was a high percentage of requests from known
EPP patients for continued SCENESSE® treatment at the peak of
the daily COVID hazards. As seen from our operational results,
we have steadily grown the Company, despite the spread of the
pandemic. In analysing the rate of continuation of SCENESSE®
treatment on 30 June, we found 96.6% of patients who had
started treatment in 2016 were still requesting and receiving the
drug. Overall, through qualitative surveys patients have reported
a positive change and or improvement in their behaviours and
activities undertaken, as recorded by an inventory of daily activities.
Even in 2020, the number of treatments increased year on year as
well as the number of new patients.
We built and kept our balance sheet
clean to create options for the ensuing
years, increased our cash reserves
by 23% and expanded the Group
with an eye to overall sustainability.
GOVERNMENTS’ ROLE
In the wake of the global pandemic we have witnessed the rise
of the state’s role in choosing which workers to defend, which
companies to assist and where to allocate resources among the
9
Managing Director's Letter
general population. Households in G8 countries were handed free
money, while relief was given to businesses for rents and additional
incentives to retain workers. In a Keynesian doctrine where the
state plays a central role, central banks have kept interest rates
low while state debt is now predicted to rise to 15-17% of GDP
as borrowed funds among western countries. The stimulus seen in
Europe, the USA and Australia seems to have no boundaries with
an aim to keep economies fluid.
There are many ifs and nobody, including
our central banks, really knows how to
forecast our economies for the next 12
months. We are in unchartered territory.
However, I continue to believe that a deflationary environment
cannot be maintained, nor can prices be kept low long-term, and
when inflation eventually creeps in, the concern will be how this will
affect businesses and specific sectors. Without having foresight,
I see it as management’s task to read the markets as well as
we possibly can and conceptualise how to protect the group of
companies against these macro-economic waves.
regulators find
the state’s financial
Central banks are now openly intervening in public markets.
themselves
In parallel,
overburdened in combatting distortion of equity markets where
algorithms and short selling dominate daily trades. At CLINUVEL,
we have had our fair share of these practices as witnessed since
April 2019. Having gone through these episodes in the past (most
conspicuously in 2007), I know from experience that continued
corporate performance, generating further intrinsic value will
eventually wash out these short sellers. In the meantime, the pain is
borne by all shareholders, including CLINUVEL’s staff, ergo holding
steady is the mandatory approach.
Economies are seeing the delayed effects of the pandemic,
whereby the surplus nations such as Germany, Japan and China
have seen a sharp decline in exports, while overall consumption
has been reduced to the necessary goods and services. While
the International Monetary Fund and US Federal Reserve have
revised their forecast to a fall of GDP in 2021 to under 5%, the
European Central Bank has been more moderate and predicts
negative growth of 3% for 2021. As a footnote, the further global
recovery is contingent on the fiscal and economic stimulus by the
richer nations slowly waning off, central policies to remain effective,
foreign demand to pick up and societal uncertainty to ebb away.
There are many ifs and nobody, including our central banks, really
knows how to forecast our economies for the next 12 months. We
are in unchartered territory.
Reviewing 2020, chaos ruled in China first, followed by confusion
on the European continent and eventually, lockdowns in the US and
Australia and periods of circuit-breakers in Singapore and South-
East Asia. Just when the world prepared to resume to normality in
May, the second wave of the pandemic struck Europe, Australia,
and parts of Asia, whereby the US had remained throughout the
year in a state of nationwide restriction. At the time of going to
print, there seems to be a renewed emergence of the viral spread,
with an R-factor of 1.6 in the European Economic Zone and steady
spread in the US. Thus, prolongation of restrictive measures seems
unavoidable.
ADAPTIVE MINDSET REQUIRED
Adaptation - as in rapidly accepting a changing environment -
comes to mind as the main hymn when reflecting on 2020. I have
been most impressed by our teams and their interconnectedness.
New professionals joining the Group were without warning asked
to work from home, some of them not properly set up to work
remotely and unfamiliar with the processes of the new company
they had joined. Communication has become the key attribute to
cross functional flow, operating procedures, and advancement of
R&D, while financial discipline is maintained. Thus far, CLINUVEL’s
10
staff have stood up to the task and the same talented pool of
people will continue to rise to the challenges as the economies and
markets continue to oscillate.
At the peak of the first wave of COVID, we introduced an individual
monitoring system for tracking communications. The weekly
reports provide us insight into the Group’s activities hour by hour,
since we needed a baseline number of outward and inbound
emails, video conferences and connectivity between our global
teams.
With a mindset to globalisation, we concluded paradoxically that
crisis management needed to take place locally. While Brexit had
been postponed twice and the definitive transition period is set to
end on 31 December 2020, we were forced to consolidate our UK
operations while establishing two new hubs within the European
Economic Area. Integration of the Group is key to continued
success, meaning that the same procedures, rules, and financial
rigour needs to be adopted by all subsidiaries.
Talent joined the Company, and in a remote world very little
time is available to young professionals to immerse themselves
in our work that is heavily dictated by deadlines and due dates.
I am of the belief that young people need to be endowed with
responsibilities early on and I repeat this phrase in many interviews
with candidates. At CLINUVEL we have laid a basis whereby staff
are accountable early on in their career, errors are accepted but a
thorough evaluation and avoidance of repeat is required. In these
unexpected times and economic reversal of fortunes, individual
responsibility is more important than ever. I have seen rays of light
and real prodigies shining through our R&D, clinical, commercial,
and financial management.
The new Chairman introduced advanced measures to align all
staff with the corporate’s objectives, while the Risk Charter and
governance were reviewed in depth. The financial management of
the Group remains one of our core strengths, the IR and PR efforts
of our team reaped benefits and the media and communications
team increased its activities by putting out more published news
than previously through various social media channels, ASX
announcements and translating technical news
for broader
audiences.
In the new economic era, I view radical changes to CLINUVEL’s
business plan as imperative. Less will be more: less face to face
interactions, fewer meetings, and faster and more effective
decisions to be taken. A relaxation of risk management implies
that more errors can creep in, therefore increased controls and
contingency plans are needed as part of processes. For instance,
in R&D one would expect less time to repeat and reproduce
experiments but more time to validate methods, a greater number
of formulations, more analytics run simultaneously and increased
number of planning to increase the generation of replicable data.
In terms of clinical trials, it will translate to more trials sponsored by
CLINUVEL, more proofs of concept studies in less centres.
For the third year in a row we have
issued a dividend. With the year
dominated by global turmoil we
wanted to demonstrate our gratitude
to the long-term shareholders
staying with the CLINUVEL story.
In reviewing each single crisis I have endured with our senior staff
the past decades, I can confidently say that specific to CLINUVEL
at each of the troubling times, new gains were found when we put
our minds to original solutions. This attitude is a repetitive trait by
our people, perhaps it has even become an asset of the Company,
attracting to CLINUVEL new talented professionals with the same
attitude. The reality of the viral threat puts the CLINUVEL team to
the test - our output, financial results and handling of suppliers
and hospitals during these sensitive times speaks volumes and I
am proud of our staff’s resolve and perseverance exhibited during
these challenging times .
I assign the current success to the discipline bonding the Company
across staff and Board. Many of the features of our team over
the past months have reminded me how our key managers
handled the 2007-2009 crisis. It certainly gives me courage that
this assembly of professionals will be able to weather unexpected
events in the future. While in 2007, the loss of CUV value was due
to the managers of a hedge fund dumping their portfolio of illiquid
stocks on the open market, causing a steep decline in share price,
the current crisis has been triggered by global events causing
externalities. The management of these seismic events is not new
to our team. In effect, crisis management is part of our fire-drills
across many disciplines of the Group, such as in pharmacovigilance
and quality control, acted out as simulation exercises.
As Managing Director, I see it as my
principal task to enable staff to excel
in their performance by creating and
maintaining a positive and conducive
professional environment.
CLINUVEL’S EXPANSION
In a discussion first initiated by analyst Sarah Mann (of Moelis
Australia Securities), other colleagues had debated the value of
diversification versus focus, whereby CLINUVEL has been taken
as an example with a long-term business focus. I have written
about this in various News Communiqués in past years. There is
no absolute answer whether this is right or wrong or whether one
increases inherent business risks by focussing a company on one
technology and expanding onwards. Each project, each company
needs to be evaluated on its own merits, as a separate business
case with specific characteristics which do not lend themselves
to equal comparison. However, specialisation originating from
dedication and focus often leads to domination in one area of
technology, science, and operations. Naturally, success attracts
others to the space, and unsurprisingly CLINUVEL will have its
competitors in time to come. However, focus is difficult to replicate.
Diversified companies will most likely not commit to causes like
focussed entities are able to do, and whether this advantage
translates to long-term sustainable value will be played out in time.
Furthermore, concentration on business segments generally leads
to translational use of technology and more opportunities to open-
up.
Under this scenario, CLINUVEL scaled up its R&D activities in-
house in Singapore (VALLAURIX PTE LTD). The Singaporean
the Economic Development Board,
government,
recognised our investment and decided in February to contribute
up to S$500,000 in funding allocated to equipment and the hiring
of local personnel.
through
At the time of going to print, the state-of-the-art VALLAURIX
Research & Development Centre has been delivered to our Group,
albeit still working in shifts under the circuit breakers put in place
by Lee Hsien Loong, Singapore’s
‘Chief-in-Command’. The
laboratories are being equipped with modern technology, whereby
both a biological and analytical laboratory are at the centre of our
facilities. With this R&D hub, we have attracted a pool of talented
individuals, scientists with a drive to develop Singapore’s first
commercial pharmaceutical products to market. As VALLAURIX is
expanding, daily coordination between our Singapore and global
teams take place by various channels to ensure total integration
within the Company. The VALLAURIX Research & Development
Centre is part of our aim to vertically integrate all facilities in-house.
This will require a further diversification of disciplines across the
Group in a controlled manner. I intimated before that expansion too
fast carries the risk of loss of focus and eventually failure, too slow
a lack of targeted progress. Two more disciplines will be added to
Managing Director's Letter
CLINUVEL’s armamentarium before the foundations of the house
can be considered complete.
The pipeline of molecules and products coming out of VALLAURIX
aims to address various markets ranging from acute diseases to
over-the-counter markets complementing our current treatment
and providing name
recognition among wider consumer
communities. The first follow-on product, the liquid formulation of
afamelanotide, PRÉNUMBRA® was announced in July 2020. By
working on several fronts, I am certain our research teams will
continue to surprise us all with further output the next year.
Diversification from within is the mantra, and expansion of
pharmaceutical products originating from the knowledge and
progressive insights from our professionals is the safest way to
bring CLINUVEL forward. Under the authority of Chief Scientific
Officer Dr Dennis Wright, VP Scientific Affairs Dr Tim Zhao, and
Head of our R&D Centre Dr Uma Rai, we have ample to look
forward to. Our teams have chosen the least degree of risk in
diversifying yet staying within the field of melanocortins.
In planning all the Group’s activities, Board and management is
cautiously balancing receipts, profits versus investments. The past
year we discreetly invested up to 20% of annual turnover in related
technology and more in personnel but stayed well within our
preferred financial parameters. Here, risk versus rate of progress
is reviewed periodically to balance the company between prudent
expansion and financial strength.
When entering a recession, the learnings from past downturns are
multi-fold. Firstly, adverse market reactions last longer than most
analysts predict, the economic reverberations run deeper. The
current European plunge into recession will affect many sectors
permanently: hospitality, travel, and catering, but also healthcare.
A second take-away is that each company and business unit must
keep its output high. Economic output is partially determined by
the supply side, and of course the demand originating from the
market served. Third, the ability to manage cash receipts obviates
the need for capital, an invaluable protection of value. Although
much jubilation exists about the records booked on US exchanges
and the ASX, we remain cautious as to the possibility of major
market corrections and its impact on shareholder sentiment. Our
IR manager and finance team have had a plentiful year engaging
actively with major institutions, and subsequently we have seen the
emergence of two new and large US institutions on CLINUVEL’s
register, holding collectively over 6%. As CLINUVEL consolidates
its financial position and expands its offerings, it will attract new
international investors.
For the third year in a row we have issued a dividend. With the
year dominated by global turmoil we wanted to demonstrate our
gratitude to the long-term shareholders staying with the CLINUVEL
story. The success of this program started with a detailed planned
financial strategy and under the auspices of Darren Keamy, it has
been well executed. In my last period as Managing Director, I
intend to see the financial management continue for the Company
to secure its longevity. With that objective, we will exert our
maximum effort to diversify and generate profits within the group
of companies.
As Managing Director, I see it as my principal task to enable staff
to excel in their performance by creating and maintaining a positive
and conducive professional environment. Remaining close to my
beliefs, we demand much from our staff, but take a constructive and
supportive approach when it comes to the time needed to adapt
and learn new skills. With that hybrid approach to the business, we
pride ourselves to attract unique talent, retain staff for the longer
term and thereby increase the knowhow within the Company. In
2020, there has been a balanced mix of new professionals and
seasoned managers who had reached their career objectives at
CLINUVEL. Some of these managers left CLINUVEL not only
as accomplished professionals, but also as shareholders with
substantial experience to be used in life sciences elsewhere.
11
Managing Director's Letter
At this point in time, the
Company is in the best financial
position since its inception.
CONCLUSION
I see it as my duty to direct an orchestra of gifted individuals,
reacting and putting measures in place to secure a future for
patients, staff members and shareholders in times of desperate
economic conditions. The past months, we have effectively
secured the supply of product and cashflow to the Company.
An increasing percentage of patients is receiving SCENESSE®
treatment in more countries, and in April 2020 the distribution of
the pharmaceutical product started in the United States. Our
teams have been active in Europe, the United States and China,
and are awaiting the Australian regulatory outcome. R&D output
is forthcoming, while the second product PRÉNUMBRA® was
announced in July. While I daily observe sufficient areas for
improvement within the Group, we have also arrived at a point
where many of us at the start of the journey could not have
predicted the current position. Of course, success is a fickle
definition and can be measured by various parameters such as
stock price, products in pipeline and rate of expansion: higher,
bigger, and more. Realistically, the success of CLINUVEL is one to
build and reflect on.
At this point in time, the Company is in the best financial position
since its inception. The financial strategy has been executed with
accuracy and expansion has supported the growth in earnings.
I am more optimistic than ever on the future of the Company
and that all our teams are collectively working towards the same
objectives, (first published in 2019) outlined below:
RATIONALE
To promote growth in value of the Company
To provide financial stability and protection
OBJECTIVES (See the 2019 Notice of Meeting for further details)
Market Cap ranging from A$1.7B to A$7.5B (i.e. a share price +/- A$34 to A$151)
A$60 million to A$150 million in cash for minimum of two quarters
To diversify the Company while maintaining profitability
Successful acquisition, profitable within 3 years
To increase the revenue base
US revenues, increasing 10%, >$10 million p/a
To build further value from internal product development
OTC product line, topical formulation, paediatric formulation
To expand the use of the lead pharmaceutical product, entering new
markets
Vitiligo or other indication/molecule progressing to Phase IIb and Phase III, with
results published
New products, markets, revenue base
New regulatory approvals in EU, US, AU, JP, or CH
Unanticipated opportunities, which are value accretive
Extraordinary and unanticipated value accretive achievements
1
2
3
4
5
6
7
8
These self-imposed objectives are ambitious for any pharmaceutical
company, and certainly for us since we opted to vertically integrate
the Group. These objectives will add value to the Group and form
the foundation for years of growth. Intellectual property is being
secured, knowledge protected, and qualified staff groomed to
become senior management. Together with my management
team, I look forward to the unfolding of the CLINUVEL story over
the next 22 months.
To all those who wished us well in the weeks following the
announcement of the quarterly and annual financial results, I
reciprocate and wish you a healthy and prosperous year ahead in
holding CLINUVEL in your portfolio. To the patients and families
who have long waited for SCENESSE® in the United States,
we express our appreciation for your patience. On behalf of
CLINUVEL’s Board of Directors, we express our appreciation for
your continued support.
MANAGING DIRECTOR’S MESSAGE TO GERMAN
SPEAKING SHAREHOLDERS
Mein besonderer Dank gilt allen deutschsprachigen Aktionaeren fuer
die Unterstuetzung von CLINUVEL. Wir haben von Ihnen ein gutes
Feedback zu unseren deutschen Nachrichtenmitteilungen erhalten
und werden diese auch weiterhin veroeffentlichen. Der diesjaehrige
Geschaeftsbericht befasst sich mit Wachstum und Expansion
und spiegelt den Wendepunkt in der Unternehmensgeschichte
wider, der durch die Zulassung von SCENESSE® durch die US
amerikanische FDA fuer die Behandlung von erwachsenen EPP-
Patienten im vergangenen Oktober gekennzeichnet ist. Diese
Meilensteinentscheidung ist der Katalysator, der CLINUVEL das
Potenzial eroeffnet, SCENESSE® und seine Derivate auf ein breiteres
Spektrum von Patientengruppen zu diversifizieren. Als langjaehrige
Aktionaere wissen Sie, dass der Weg der Produktentwicklung
im Pharmasektor lang sein kann. Wie in meinem Schreiben
dargelegt, ist das CLINUVEL-Team entschlossen und fokussiert,
diese Behandlungen fuer Patienten mit Prioritaet zum Nutzen aller
voranzutreiben. Vielen Dank.
Philippe Wolgen
Managing Director, CLINUVEL Group
12
CLINUVEL IN THE NEW WORLD ORDER
INTRODUCTION
The coronavirus pandemic has changed the world in which we
live and operate. How we engage with one another, balance work
and life, produce goods and services, and manage the impact of
the increase in public spending incurred to support people and
economic activity has changed to varying degrees and will continue
to do so. The purpose of this piece is not to analyse the changes
in societal norms and structural changes in economies, as this
requires more time to interpret emerging trends. Rather, it serves
to highlight that CLINUVEL is entering a new world order in which
the potential implications for people and economies are forever
changed by the materialisation of a key risk – global pandemics
and the way we will communicate and do business.
There is a multitude of known and unknown risks facing people,
governments, businesses, and other operators in the economy.
For businesses across the globe, as for other economic entities,
the need for prudent risk management has been underscored by
the coronavirus pandemic and its direct and indirect impact on
their viability and future performance. This timely feature provides
an overview of CLINUVEL’s approach to risk management and its
commitment to the prudent management of Environmental, Social
and Governance (ESG) criteria which are now integrated within
risk management and investment decisions, and closely linked to
sustainable corporate performance.
CLINUVEL’S PRUDENT APPROACH TO RISK
MANAGEMENT
The prudent management of risk is essential to the achievement of
CLINUVEL’s strategic initiatives and the progress of the Company
towards a diverse and integrated biopharmaceutical company
aimed at providing treatments to multiple patient groups. CLINUVEL
has a conservative risk culture and this is reflected in its thrifty
financial management over the years to develop and commercialise
SCENESSE® (afamelanotide 16mg) for the treatment of adult
patients with erythropoietic protoporphyria (EPP). The Board of
Directors has mandated its executive management to execute
a conservative strategy while growing the Group of companies.
Specifically, the development cost of SCENESSE® has been well
below the cost of comparable pharmaceutical company orphan
drug development focused on a new molecular entity. In addition,
CLINUVEL’s decision to self-distribute SCENESSE® in Europe
and the USA has proven cost effective and ensures value for
shareholders. With careful cost control and prudent management
decisions, CLINUVEL has strengthened its balance sheet after four
years of commercial operations, with no debt and a cash position
sufficient to finance its immediate future expansion. CLINUVEL
is risk adverse and deliberate in its actions, and actively seeks to
identify and proactively manage various risks.
The core of our risk approach is the maintenance of a risk register
that details and ranks identified risks and their mitigation. The
risk register enables the formal consideration of risk by senior
management and the Board, while also highlighting potential
opportunities. This in turn helps to ensure that all significant
risks are suitably identified, assessed, and managed. A key part
of risk management is ensuring we meet societal expectations,
regulations and laws on corporate standards and conduct. Thus,
since ESG criteria cover essential aspects of our operations and
adherence to these serves to minimise risk, these are very much a
part of our risk management approach and are included in the risk
register. There is a multitude of benefits to maintaining an active risk
register, the most obvious being ensuring the Company is well-run
and keeping Board and management alert to the risks which need
attention.
THE UNITED NATIONS GLOBAL COMPACT AND ESG
The United Nations Global Compact (Global Compact) was
established in 2000 by then United Nations (UN) Secretary-
General Kofi Annan to implement universal principles in business
that advance responsible corporate citizenship, better aligned to
the UN’s global development objectives. In January 2004, Annan
wrote to 55 of the world’s leading financial institutions to invite them
to develop guidelines and recommendations to better integrate
ESG criteria in the operation of financial markets. Twenty financial
institutions participated and endorsed the resulting report, “Who
Cares Wins”, in December 2004. The report was completed under
the auspices of the Global Compact and contained a “call to action”
to stakeholders in the financial and business world: companies were
asked to lead the implementation of ESG principles and policies
by providing information and reporting on related performance and
to identify and communicate the key challenges and value drivers
associated with ESG issues.
Since then, ESG has gained prominence throughout the global
investment community, playing a key role in the analytical
assessment of companies and investment decisions. (ESG-
based investment is often referred to as sustainable investing,
responsible investing, impact investing or socially responsible
investing.) Large and influential institutional investors have aligned
prudent management of ESG criteria with sustainable long-term
growth and have integrated ESG criteria into their due diligence
of investments. An online search for the term “ESG and company
performance” reveals a multitude of studies that support a positive
correlation between responsible ESG management and enhanced
financial performance, efficiency, and firm value. A review by Friede,
Busch and Bassen (2015) of around 2,200 individual studies since
the 1970s concluded that roughly 90% of studies found a non-
negative correlation between ESG criteria and corporate financial
performance, with a stable link evident over time.
The Global Compact is a call to action to companies around the
world to align their strategies and operations with five defining
characteristics of corporate sustainability and
ten universal
principles in the areas of human rights, labour, environment,
and anti-corruption. The UN vision is that appropriate action in
these areas will support their broader sustainable development
goals. The Global Compact is the world’s largest global voluntary
corporate sustainability initiative with over 8,000 companies and
4,000 non-business participants in over 160 countries. The five
defining features of corporate sustainability and ten universal
principles promoted by the Global Compact are outlined below:
13
CLINUVEL In the New World Order
Five Defining Features of Corporate Sustainability
Ten Universal Principles
1. Principled Business
• Operating with integrity in alignment with ten principles in the areas of
human rights, labour, the environment, and anti-corruption
2. Strengthening Society
Human Rights
1. Businesses should support and respect the protection of internationally
proclaimed human rights; and
2. Make sure that they are not complicit in human rights abuses.
Labour
3. Businesses should uphold the freedom of association and the effective
recognition of the right to collective bargaining;
• Taking action and collaborating with others to advance global challenges
4. The elimination of all forms of forced and compulsory labour;
5. The effective abolition of child labour; and
6. The elimination of discrimination in respect of employment and occupation
3. Leadership Commitment
Environment
• Effective long-term change begins with a company’s leadership
4. Reporting Progress
• Transparency in business practice is crucial for sustainability
5. Local Action
• Viewing sustainability through a local lense
7. Businesses should support a precautionary approach to environmental
challenges;
8. Undertake initiatives to promote greater environmental responsibility; and
9. Encourage the development and diffusion of environmentally friendly
technologies
Anti-Corruption
10. Businesses should work against corruption in all its forms, including
extortion and bribery
Source: United Nations Global Compact (2014), Guide to Corporate Sustainability, Shaping A Sustainable Future
CLINUVEL’S ESG FRAMEWORK
The Global Compact and UN tenets on ESG and sustainability
inform CLINUVEL’s approach. As a responsible corporate citizen
and active manager of risk, CLINUVEL embraces the ESG
Framework below, as outlined in the Company’s 2019 Annual
Report to Shareholders.
CLINUVEL’S ESG Framework
Environment
Social
Governance
Conscious of our
World
recognise climate
change
energy management
supplier standards
safe and responsible
materials handling
no adverse impact on
global objectives
CLINUVEL Values
Fairness and Equity
human rights
Responsibility and
Compliance
freedom of association
honesty and integrity
equal opportunity
corporate governance
value diversity
compliance
work-life balance
ethics
training and education
supplier standards
supplier standards
CLINUVEL’s values are placed at the base of the framework to
reflect their fundamental foundation in governing our behaviours
and how we conduct our business. The key tenets of this
framework are explained further below.
FOCUS ON THE ENVIRONMENT
We are conscious of the world in which we operate and importantly,
have no adverse impact on the achievement of the UN’s global
environmental objectives. Our management of environmental risk
is appropriate for a relatively small company (with less than 100
employees), striving to minimise energy and water use and exercise
prudence in the management of office waste as we work towards
14
a paperless office. SCENESSE® and its key input, afamelanotide,
are manufactured by reputable contactors in developed countries
under World Health Organization Good Laboratory Practice (GLP)
and manufacturing standards. Upon final regulatory inspections
and certifications, our new laboratory facility in Singapore will
operate to GLP under ISO 17025. CLINUVEL’s product SCENESSE®
is administered by subcutaneous injection and dissolves in the
human body and has no adverse environmental impact. We also
regularly assess the commitment of our suppliers to minimise their
use of scarce resources and act in and environmentally responsible
manner in accordance with ESG criteria.
responsible corporate citizen and
SOCIAL RESPONSIBILITY
CLINUVEL
reflects
is a
international community standards in our policies. The UN tenets
on human rights and labour standards embedded in the UN
International Covenant on Economic Social and Cultural Rights
(1966) and International Covenant on Civil and Political Rights
(1966) are reflected in our Employee Handbook. These covenants
recognise the right to work, including the opportunity to earn a
living by work that is freely chosen and accepted (Article 6); the
right to enjoy just and favourable conditions of work, including
minimum remuneration, safe and healthy conditions of work, equal
opportunities for all, rest, leisure, initiation of working hours and
holidays with pay (Article 7); and the freedom of association and
collective bargaining and the right to strike (Article 8). Specifically,
CLINUVEL is committed:
• on Human Rights, to
○ freedom of association; and
○ supporting a diverse and inclusive workplace, with equality
of opportunity of all employees regardless of race, colour,
gender, religion, ethnicity, culture, political opinion, age, and
disability.
• on Labour Standards, to
○ the right to organise and collective bargaining;
○ zero
forced
tolerance of child
labour,
discrimination, harassment, and abuse of any kind;
labour and
○ providing a decent workplace focused on the health and
safety of employees;
○ supporting the training and education of all employees.
Opportunity is equal to all people in CLINUVEL and procedures
are in place to escalate, review and address any human rights
and labour standard concerns. The Group’s employees span 16
nationalities and gender representation is balanced, as reflected in
the following table on the composition of genders on the Board, in
senior management and across all employees.
suppliers and reviews existing relationships according to a range
of expectations and standards before commencing or continuing
supply arrangements. CLINUVEL has over 15 key suppliers,
most of which are domiciled in well-regulated countries that are
signatories to the UN standards and objectives on sustainability
and ESG criteria. CLINUVEL has a high proportion of medium- to
long-term supplier relationships, enabling us to develop a good
understanding of their values and commitment to ESG criteria. This
diligent approach also applies to the assessment of our relationship
with collaborative partners.
CLINUVEL In the New World Order
Gender Representation in CLINUVEL
Category
Date
Female
Male
30 June 2020
30 June 2019
30 June 2018
30 June 2020
30 June 2019
30 June 2018
30 June 2020
30 June 2019
30 June 2018
50%
40%
40%
57%
57%
57%
60%
66%
66%
50%
60%
60%
43%
43%
43%
40%
34%
34%
Board
Top 7 salaried
employees 1
All Employees 2
1 excludes Executive Director.
2 consolidated entity.
Work-life balance is supported by our Employee Handbook and
a new Remote Working Policy. Necessitated by the coronavirus
pandemic, CLINUVEL initiated the Remote Working Policy to
ensure the ongoing health and safety of all CLINUVEL employees
and provides guidelines to enable an appropriate work-life balance
with overall flexibility in the conduct of employees’ work, during
and beyond the coronavirus pandemic. Employment security is
conducted in accordance with labour laws and regulations in each
of the countries in which we operate. All staff are encouraged
to own an active training and development plan to support their
professional fulfilment and job satisfaction.
take a responsible approach
We
to product development
and distribution. CLINUVEL has no adverse impact on UN
social objectives and makes a positive contribution through its
pharmaceutical product development and distribution for unmet
medical needs.
CLINUVEL’s research and development program is highly ethical.
We undertake the minimum studies necessary to obtain the
regulatory approvals required to distribute our treatments in man.
We use Ethics Committees for study approval, adhere to OECD
Testing Guidelines and the principles of GLP. We are committed
to the OECD Replacement Reduction and Refinement Principles
for non-human studies and ensure all studies undertaken are
responsibly designed and conducted by laboratories certified
by internationally recognised and respected bodies. CLINUVEL
disseminates its research and encourages the independent
publication of the results of its clinical studies in peer-reviewed
scientific journals.
A rigorous pharmacovigilance program is maintained and reported
to the European Medicines Agency (EMA) in the European Union
and the United States Food and Drug Administration (FDA) on the
real-world experience of SCENESSE® for adult patients with EPP.
SCENESSE® is carefully managed to ensure no off-label usage.
Marketing and communications are aligned to the approval terms
and conditions of distribution of the EMA and FDA.
CLINUVEL is responsible for ensuring that its suppliers are
fit for purpose throughout the product lifecycle (from product
development to commercial distribution), through risk-based quality
control procedures and open communication. CLINUVEL qualifies
Should an area of concern be identified during a review of a
supplier, a risk assessment is conducted to ensure the supplier is
functioning within contracted capacity and standards. CLINUVEL
then applies a collaborative approach with the supplier to engage
in discussions with the aim of improving their qualification status
and strengthening the relationship. These procedures enable
CLINUVEL to maintain the qualified status of its medium to long
term tenured suppliers. Furthermore, it ensures CLINUVEL’s ESG
principles and those of its suppliers are consistently aligned.
CORPORATE CONDUCT AND ETHICS
Corporate governance is a key to effective risk management as
it provides the policy, procedures, and compliance framework
for a company’s operations. Our corporate conduct and ethics
are guided by our key corporate values and governed by our
Corporate Governance Protocol and annual Corporate Governance
Statement.
CLINUVEL’s Board of Directors comprises the Managing Director,
Dr Philippe Wolgen, and five independent Directors. They are,
individually and collectively, well credentialed, with a breadth
of qualifications and depth of experience in a range of fields to
provide appropriate guidance to the Company. In the last year,
the number of Directors has increased by one to six. The Board
operates in accordance with a Board Charter that is set out in
the Corporate Governance Protocol. The election and tenure of
Directors is managed in accordance with the Australian Securities
Exchange (ASX) Listing Guidelines. The gender representation at
Board level is uniquely balanced, reflecting the broader Company.
The compensation of Directors and key executives, covering
key performance indicators for the assessment of short-term
and long-term performance awards, are detailed annually in the
Remuneration Report in the Annual Report.
institutional
CLINUVEL is focused on the maintenance of a long-term shareholder
base which includes employees and a balanced composition
of private, corporate, and
investors. CLINUVEL
seeks an active and constructive dialogue with its shareholders,
in accordance with ASX Listing Guidelines. We communicate
frequently with shareholders, as outlined below, by operating an
active program of regulatory and discretionary disclosures of
information on the Company through announcements to the ASX.
This includes regular corporate updates to keep shareholders
informed on the Company’s performance and progress on key
strategic initiatives.
CLINUVEL’s Corporate Governance Protocol meets
the
requirements of ASX principles and recommendations and
includes a Code of Conduct and Ethics and policies on Conflicts
of Interest, Share Trading and Shareholder Communications.
CLINUVEL has zero tolerance of corruption of any kind. We operate
a training schedule to ensure compliance with laws and regulations
in the countries in which we operate. CLINUVEL staff are also
encouraged to report any breaches of company values, regulations
and laws and are protected from harassment and abuse on any
reports of non-compliance or breaches. CLINUVEL engages with
the leading law firms across the continents to ensure adherence to
the highest level of governance.
15
CLINUVEL In the New World Order
CLINUVEL’s Corporate Governance Protocol sets out the code
of conduct and ethics and other policies to ensure conflicts of
interest are avoided and honesty and integrity prevails. We are law
abiding and comply with anti-bribery and anti-corruption laws in
the countries in which we operate.
the
that enable
MANAGEMENT OF STAKEHOLDER
COMMUNICATIONS
The twenty-first century has heralded new and improved innovation
instantaneous
in communication channels
worldwide dissemination of information – in itself, this constitutes
a new world order. These advances are advantageous for the
operation of capital markets and investment activities. A key part
of CLINUVEL’s approach to communicating to stakeholders is the
use of multiple online channels to provide up to date information
on the Company’s strategy and performance. The process of
dissemination starts with an announcement to the ASX, after
which CLINUVEL distributes to multiple news media outlets, our
‘email updates’ list, and posts on various social media platforms.
We also maintain a library of announcements and information
on the Company on our website, www.clinuvel.com. However,
the technological advances in communications and information
exchange are not without significant potential risk to companies
and orderly investment activities in general.
Information dissemination online has become the social norm and
has outpaced the protection of privacy and copyright regulation and
enforcement. Laws and regulatory instruments have been unable
to keep up with these real-world practices and trading activities
on equity markets. Identified and anonymous parties can copy
and post information in breach of copyright and can make false
and misleading statements, either intentionally or unintentionally, in
many online channels near-simultaneously.
Parties involved in stock shorting activity actively seek to drive a
company’s share price down to make a profit from share trading
– they buy shares at a lower price than the shares they have
borrowed to sell. Katz and Hancock (2017) of Ropes and Gray
LLP note that ‘shorters’ actively use online communications
either directly or indirectly through antagonists, to post reports
on business platforms and discussion forums to undermine the
confidence of shareholders and induce them to sell their shares
at lower prices. CLINUVEL has not been immune to this type of
conduct with shorting activity of CUV increasing from less than 1%
of issued capital in April 2019 to a peak of 9.65% of issued capital
in April 2020, before lowering to around 7.7% after mid-September,
at the time of finalising this article. There has been an increase in
false and misleading comment on CLINUVEL in discussion groups,
which Katz and Hancock (2017) normally associate with an active
shorting campaign.
CLINUVEL’s approach in the face of this activity is to focus on
the progression of publicly stated strategic initiatives and provide
regular and objective information to markets on the Company’s
progress. This approach enables market participants to assess
an objective flow of information to appropriately inform their
investment decision in CLINUVEL. In the medium- to long-term,
the performance of the Company should improve the demand for
CUV and curtail the activity of ‘shorters’. This approach in action
is reflected in the pace of the progress of the Company which has
enabled more frequent material announcements to the ASX. The
number of CLINUVEL announcements to the ASX increased from
44 in the year ending June 2018 to 62 and 67 in the 2019 and
2020 financial years, respectively. The Company’s discretionary
announcements providing updates of the business in Chair
Letters and News Communiqués are more frequent than other
companies or peers in the ASX / S&P 200 Index and are authored
by the Chairman and Managing Director to communicate directly to
shareholders. This is a peer group leading practice. We also play
a role to point regulators in the countries in which our shares are
actively traded – CUV on the ASX in Australia, UR9 on the Xetra-
DAX in Germany and CLVLY in the US through over-the-counter
16
traded American Depositary Receipts administered by the Bank of
New York Mellon – to inappropriate activities.
We feel a responsibility to protect key stakeholders, patients,
and doctors as well as shareholders, from inappropriate online
activities. This extends to us liaising with online service providers
and moderators of online channels when laws and regulations
are breached. There are recent indications that regulation may be
starting to make up some ground in the area of online defamation
with precedent setting court decisions in Australia and the United
Kingdom providing clarity of what constitutes a ‘publisher’ under
defamation law. Online service providers and owners of online
discussion forums have been held liable as a ‘publisher’ under
defamation law with the trigger of culpability being their inaction
upon being made aware of defamatory posts. Interestingly, each
view, like or retweet of a defamatory post is considered a new
publication and individuals who anonymously post defamatory
material online are at risk of being identified by online service
providers and owners of online channels in response to court
orders issued during pre-trial discovery. US courts have made
mixed judgements depending on the circumstances of the case,
but some have held online service providers liable for defamation.
In the US, plaintiffs have one year to take legal action against the
initial defamation and cannot claim against successive and multiple
re-publications. We will not cite the sources of legal precedent
here, but they can be found online. The point of these comments
is to highlight that your Company is focused on reducing the risk
of misinformation and breaches of the law for the sake of objective
information and the protection of key stakeholders.
to underpin
SUMMARY AND CONCLUSIONS
CLINUVEL has a conservative and prudent risk management
culture with a firm commitment to environmental and social
responsibility with appropriate corporate governance as a
long-term sustainability and
key accountability
performance. The commitment to prudently manage risk and
adhere to ESG criteria as a responsible corporate citizen is strongly
held at Board level, by executive management and extends to all
CLINUVEL staff. The Company’s vision and values, presented in
earlier pages of this report, support effective operations aligned
to the achievement of ESG and sustainability criteria. We regard
our journey to sustainability as an ongoing process of continuous
review and improvement to enhance our ESG performance and to
share our progress with stakeholders in periodic announcements
and reports, such as this Annual Report. All stakeholders should be
comforted by this responsible and prudent approach, particularly
as we enter a new world order.
SOURCES
The Global Compact (2004), Who Cares Wins, Connecting Financial
Markets to a Changing World
UNEP Finance Initiative, A legal framework for the integration of
institutional
environmental, social and governance
investment, October 2005
issues
into
New York Stock Exchange (2006), Principles for Responsible
Investment
Gunnar Friede, Timo Busch and Alexander Bassen (2015) ESG and
financial performance: aggregated evidence from more than 2000
empirical studies, Journal of Sustainable Finance & Investment, 5:4,
210-233, DOI: 10.1080/20430795.2015.1118917
United Nations Global Compact
Sustainability, Shaping A Sustainable Future
(2014), Guide
to Corporate
United Nations Global Compact (2017), United Nations Global
Compact Progress Report, Business Solutions to Sustainable
Development
(2015), Compendium of
International Labour Organization
International Labour Conventions and Recommendations, http://
w w w.ilo.org /wcmsp5/groups/public/---ed _ norm/---normes/
documents/publication/wcms_413175.pdf
Jeff Katz and Annie Hancock, Ropes and Gray LLP (2017), Short
Activism: The Risk in Anonymous Online Short Attacks, Harvard Law
School Forum on Corporate Governance, November 27
INNOVATION IN DNA REPAIR
CLINUVEL’S FOCUS ON DNA REGENERATION
The backbone of human life is created by two structures forming
our genetic material: pyrimidines and purines, which in turn consist
of four nucleotides adenine (A), thymine (T), guanine (G), and
cytosine (C). These form the DNA-helix which carries our present
and future make-up, our genetic codes. Human physiology tries
to keep DNA strands intact at all costs. As we are exposed to
daily oxidative stress, skin cells work hard to preserve our genetic
program.
for
the
radiation
interaction of
have
At CLINUVEL, we
two decades
focussed
on
light
and human biology, whereby
our scientific
teams have
replicating
on
worked
the deleterious effects of
solar
through
standardised conditions in our
laboratories. We have used
broadband ultraviolet B (UVB),
narrowband UVB, ultraviolet
A 1 and 2 and High Energy
Visible (HEV) light to irradiate
human skin and observe the
instantaneous reactions and
damage to the epidermis and
dermis. Both in healthy and diseased individuals, skin reactions
can be predicted and mapped out. In most of CLINUVEL’s clinical
trials, skin surfaces of various patient groups were exposed to light
sources to provoke typical sun-related symptoms. In testing the
lead drug afamelanotide, we collected this data and assessed its
potency for systemic photoprotection.
Pyrimidines and purines are the
backbone of our DNA helix
a
in
in
light
step
Going
further,
CLINUVEL evaluated its drug
various
afamelanotide
photodermatoses and
light-
induced disorders such as
polymorphic
eruption
(PLE), solar urticaria (SU), acne,
and Hailey-Hailey Disease,
and
genodermatoses
erythropoietic protoporphyria
(EPP),
congenital
erythropoietic porphyria (CEP)
and xeroderma pigmentosum
all diseases where
(XP),
radiation
certain
at
wavelengths play a part in the
triggering of severe symptoms.
In optics and physics precision
is key, and in some disorders,
one specifies action spectra
and
inhibition spectra
at particular wavelengths causing the start of symptoms in
patients. Mapping out each monochromatic wavelength along the
electromagnetic spectrum is part of the disciplines of photobiology,
photodermatology and
radiation biology, deriving scientific
knowledge from optics and physics. This knowledge has become
part of our in-house strength, expertise and starting point to
transgress into the area of UV-provoked DNA damage.
SCENESSE® (afamelanotide 16mg)
the
As genetics and cellular
biology took a flight the past
decennia,
knowledge
the
of the effects of ultraviolet
radiation (UVR) on human cells
(skin, eyes, and organs) has
increased. Most are aware of
the beneficial effects of 15-
30 minutes of UVR per day
to stimulate
the synthesis
in our skin.
of vitamin D
However, we are also made
aware of how longer periods
of exposure to UVR and HEV
light may lead to sunburns,
photodamage, actinic damage
(elastosis) and an increased risk of skin cancers as skin damage
becomes chronic and permanent.
UVR and the cell
The progression from healthy human volunteers to genetic disorders
has been logical for CLINUVEL, whereby the most severe diseases
have deserved treatment first, not least as these stand the greatest
chance of regulatory approval in global pharmaceutical markets,
such as Europe, the United States, Australia and Asia. That is not
to say that other disorders would not benefit from afamelanotide
or melanocortins, but the development route is best justified when
regulatory support is given early on in a program.
HISTORY OF DNA RESEARCH
Damage to DNA provoked by UV radiation received first attention
in 1893, when Robert Bowles published an article in the British
Journal of Dermatology suggesting that sunlight may be responsible
for skin cancers: “If the sun’s rays will produce sunburn, erythema,
eczema solare, inflammation, and blistering, it is clearly capable of
producing deep and intractable ulcerations of a low and chronic
nature.” This finding was corroborated one year later by Paul
Gerson Unna, who associated the severe degenerative changes on
exposed areas of sailors’ skin with the development of skin cancer
and rapid aging.
In the last three decades, various renowned research institutions
have focussed on the acute and chronic damage of UV and HEV
radiation to human skin. Latitudinal predispositions, localisation,
skin type, family history of skin damage and skin cancers were
among the variables studied. As cellular biology attracted attention
the cellular signalling, expressions of genes and proteins, became
a focus. As the human genome project gathered momentum at the
start of the millennium, the importance of MAP kinases, endothelin,
WNT, cKIT, MITF and MC1R pathways in providing skin cells with
the right input, directions and stimulus became widely known.
DNA REPAIR
The double-page figure to this article explains the DNA Damage
Response (DDR). Starting on the left-hand side, one sees the
DDR by skin cells which leads to a human defence reaction. The
activation of MC1R leads to a cascade of reactions seen within
the cell. Human biology is fascinating in that many reactions take
place simultaneously at the speed of nanoseconds. The signalling
of a skin cell – there are many different types – occurs from top to
bottom, starting with a particular receptor.
17
Innovation in DNA Repair
Mean UV Index
1-2
Low
3-5
Moderate
6-7
High
8-10
Very high
11+
Extreme
XPC
HR23B
XPE
XP Damage Response
The PKA-ATM-ATR axis, or the
communication between these
intracellular proteins, causes
multiple
further
reactions
the cell. Following
down
solar
exposure,
(UV-HEV)
human reactions are needed
to protect cellular structures:
organelles
proteins,
and
but specifically the nucleus
which may
require
reinforcement. In many ways,
all the process and activity
taking place above the nucleus
aim to protect the genomic
information, DNA, within the
core of each skin cell.
also
UV radiation can lead to double or single strand DNA breaks,
although the scientific experts tend to focus on single strand
breaks. UV causes typical mutations to DNA, known as UV-
signature mutations, connotated as C→T or CC→TT substitutions
of nucleotides within a DNA strand. Thus, we can detect and
recognise the kind of DNA damage caused by solar exposure. UV
also causes some of the protein expressions to be downgraded,
suppressed, and dysfunctional, making the cell work at a
suboptimal level, in turn causing an inferior output by the skin cell.
Together, the cellular dysfunction and substitutions of nucleotides
are a cause of great concern since human biology is forced to
restore the balance immediately by repairing the cellular structures.
Sun exposure makes skin cells work overtime. In the double-
page figure, one sees the result of this UV cascade, the formation
of Cyclobutane Pyrimidine Dimers (CPDs) and 6-4 Pyrimidine
Pyrimidone Dimers (6-4PPs), or photoproducts within the nucleus
caused by the sun/UVR/HEV light.
Our task after each sun exposure and sunburn is to eliminate
these photoproducts by replacing a piece of DNA. Under normal
circumstances, the human body is quite effective at doing so,
although fair-skinned individuals (skin type I, II and III) are less
efficient than darker skin types (IV, V, VI). In the first group the risk
of permanent mutations is increased and in these individuals the
incidence of skin cancers is much higher.
While we are interested in one pathway, the breakthrough in
knowledge gained the last 15 years is that various pathways and
genes within a cell communicate with each other; “horizontal
discussions” occur between pathways. Therefore, the dysfunction
along one pathway is sought to be compensated along another, all
with the aim to restore function and UV damage.
On the right-hand side of the double-page figure one reads the
properties of alpha-melanocyte stimulating hormone and its
reinforced analogue – afamelanotide – in its role restoring UV
damage. There are more than 30 cellular domains where the protein
and DNA function are aided by alpha-melanocyte stimulating
hormone, and here the 17 most important ones are listed. From
CLINUVEL’s data and specific scientific work performed, one
expects that afamelanotide will be a determinant in the DNA
reparative processes within the cell, specifically needed for those
individuals at higher risk of developing skin cancers due to genetic
receptors, and their ability to respond to the UV signal.
AN EXCITING FUTURE IN PROSPECT
The coming year, CLINUVEL will be furthering this field of research
in human subjects (XP patients and healthy volunteers) to confirm
the efficiency of afamelanotide in these cellular and DNA reparative
processes.
Fitzpatrick Types I-VI
Skin Type
I
II
III
IV
V-VI
Sunburn and Tan
Tendency
Always burns; Seldom
tans
Usually burns;
Sometimes tans
Sometimes burns;
Usually tans
Seldom burns; Always
Tans
Never burns; Always
Tans
Skin, Hair and Eye
Colour
White skin, freckles;
blond or red hair; blue or
green eyes
White skin; blond hair;
blue or green eyes
White skin; usually dark
hair; brown eyes
Darker skin; usually dark
hair; brown eyes
Naturally brown to dark
skin; brown or black hair;
brown eyes
18
SCENESSE® connects the dots
Innovation in DNA Repair
Sunburn
UVA/UVB
Photoprotects
= 100%
SCENESSE®
Repairs
DNA Damage
Reduces Risk
= high risk
Skin cancer/
Melanoma
CLINUVEL’s DNA Repair Program aims to confirm that intervention with SCENESSE® causes elimination of DNA damage (photoproducts)
and regeneration of DNA. The figure shows that SCENESSE® has been proven to protect skin from light (photoprotection) and shown to
repair DNA damage. Since photoprotection and regeneration are necessary to reduce the risk of skin cancer, the role of SCENESSE® is
obvious. In the figure, “P” stands for probability.
Having taken more than a decade of clinical and scientific research,
it is exciting to ‘close the loop’ in using afamelanotide from:
(i) assessing UV-induced skin damage in healthy volunteers, to
(ii) systemic
photoprotection
diseases
patients
in
(photodermatoses), and finally, to
(iii) reducing the risk of cellular and DNA damage caused by sun/
UVR/HEV light in higher risk populations (both healthy and
diseased individuals), and therefore reducing the risk of skin
cancer(s).
Skin cancer comes in many forms, but the three most frequently
seen in the clinic are basal cell carcinoma, squamous cell
carcinoma and melanoma (various types). Common to all three
forms is that UV and sun exposure play a part in the development,
whereby other genetic and epigenetic factors play a role. However,
the ability to eliminate or reduce the UV-inducing factor in the
genesis of skin cancer is a big step forward. Hormonal therapy
with a melanocortin may well be the future answer, since the use
of the hormone simulates the biological function of the peptide in
our body, protecting us against the insult of solar radiation. Within
seconds of sun exposure, alpha-melanocyte stimulating hormone
is detected as being released by our skin cells as a protective
measure.
A reinforced version of alpha-melanocyte stimulating hormone
was developed and formulated as afamelanotide, and the vision
is to use the drug as a DNA-protectant in many formulations.
The requisite is and remains the
safety of afamelanotide in patients
and healthy volunteers, but each
day that goes by is one extra day
towards the 100,000 plus patient-
exposure days providing evidence
of safe use.
is
ability
nature’s
the phenomenon
Biomimicry
in biology capturing and
found
to
replicating
provide
function and protection.
In afamelanotide, CLINUVEL has
developed a
long used potent
hormone to prevent sun and light
damage in those who need this
most, namely, those who are at risk
and those who suffer from genetic
disorders affecting their ability to go
outdoors. Over the next 12 months,
the CLINUVEL story will unfold and
the significance of our progress
in DNA repair in XP and healthy
individuals to the general population
at risk of UV-HEV damage will
become apparent.
19
SCENESSE® (afamelanotide 16mg)
REPAIRS DNA DAMAGE CAUSED BY UV AND LOWERS RISKS
OF SKIN CANCERS
SOLAR RADIATION
UVC
UVA
200-290 290-320 320-400 400-600 600-800
HEV
UVB
IR
SKIN CELL
+
MCR1
1
+
+
cAMP
+
+
PKA
ATM
ATR
2
S
15
+
3
S
139
p53
Chk1 Chk2
S
380
6
PTEN
+
NRF2
ET-1
+
435
S
RAS
RTM
+
P13K
RAF
IGF-IR
+
+
TFIIH
AKT MEK1/2
ERK1/2
+
γAB1
OGG1/APEI/Ref1
+
XPC
MITF
+
XPA
+
XPF
+
5
PPARγ
CREB
DNA DAMAGE RESPONSE BY SKIN
(UVR)
radiation
to
Ultraviolet
cellular stress and DNA damage
and increases risk of skin cancers,
specifically UVR leads to:
leads
1. Activation of the MC1R receptor
2. DNA damage response by
protein kinases PKA-ATM-ATR
3. High levels of p53 indicating
a stress response – (less
efficient in Caucasian skin)
4. Single strand and double breaks
5. Activation PPARγ
6. PTEN degradation
7. Cell death (apoptosis) (Cell cycle arrest)
8. Increases in matrix metalloproteinases
UV radiation leads to skin cell
damage, expression of genes,
proteins and degradation of
surrounding structures.
(γH2AX mainly in DSBs)
+
4
γH2AX
7
8
+
XPG
Thymine Dimers
Excision = cut
UV damage leads to the formation
of:
Cyclobutane Pyrimidine Dimers
6-4 Pyrimidine Pyrimidone Dimers
REGENERATION
+
HIGH RISK SKIN CANCER
20
I. DNA REPAIR = CELL SURVIVAL = SENESCENCE
II. DNA DAMAGE UNREPAIRED = CELL DEATH = APOPTOSIS
NUCLEUSDNA Innovation in DNA Repair
DNA REPAIR
SCENESSE® (afamelanotide 16mg)
beneficial effects on DNA repair
[ + in diagram]
1. Stronger binding to MC1R
2.
Optimises cAMP response
3.
Optimises DNA sensors
PKA-ATM-ATR
4. Phosphorylates p53
5. Decreases amount of
UV photoproducts
6.
Increases nucleotide
excision repair DNA
7.
Increases γH2AX
6 KEY HIGHLIGHTS: SCENESSE® DNA REPAIR
1. Acts as a physical barrier to UV
2. Optimises MC1R and ET-1 signalling
3. Reduces oxidative stress [after UV]
4. Reduces photoproducts [caused by UV]
5.
Increases activity key proteins XPC-XPA
6.
Increases NER and BER [DNA repair mechanisms]
SIMPLIFIED EXPLANATION
SCENESSE® is proven to assist repair of DNA which has
been damaged by sun and UVR (per 17 facts provided)
8.
Increase level of PPARγ
1. UVR causes instant DNA damage of skin cells
9.
Increase levels of XPC and XPA
10. Increase levels of XAB1
11. Increases efficiency
PTEN and XPC
12. Increases efficiency MITF
13. Increases base excision
repair DNA
14. Blocks UVB activated cell death
15. Suppresses oxidative stress
16. Provides genomic stability
17. Rebalances connective tissue
Reduces chances of malignant
transformation following UV and
sun exposure and sunburns.
2.
If this damage is not repaired, the chances increase in
fair-skinned individuals that DNA-damaged cells are
replicated, leading to skin cancer[s] including melanoma
3. SCENESSE® reduces DNA damage
caused by the sun’s energy by:
۬ Absorbing UVB and UVA rays
۬ Activating skin pigmentation
۬ Reducing free radical formation
4. SCENESSE® assists and expedites
DNA repair of damaged skin by:
۬ Activating key repair genes and proteins
۬ Assisting in cutting out damaged DNA and replacing
with new DNA fragment
۬ Stabilising the cell and its surrounding tissues
CONCLUSION IN SIMPLIFIED TERMS
The use of SCENESSE® in fair-skinned individuals and
high risk patients results in less skin damage caused by
sun and UV and therefore most likely reduces the chance
of skin cancer including melanoma.
21
SINGAPORE RESEARCH,
DEVELOPMENT &
INNOVATION CENTRE
SINGAPORE – WORLD LEADING
TECHNOLOGY HUB
• Sovereign island city-state
• Culturally diverse population of 5.7 million
• Excellent infrastructure and public safety
• Superior education system and access to scientific
talent
• Financial centre and largest port in South-East Asia
• Technological centre of South-East Asia with a highly
skilled workforce and business friendly environment
• Singapore Government supportive
to attract
and encourage growth of R&D capabilities and
technologies with
incentives and
schemes.
investment
THE NEW AND EXPANDED VALLAURIX
FACILITY
• Opened August 2020 in Singapore Science Park
• State-of-the-art research and development centre
• Divided into analytical and biological laboratories
• Biological lab capabilities in ex vivo experiments and
bioassays, and studies on fresh biological and tissue
cultures
• Expanded analytical capabilities with compendial
methodologies
• Capacity
to accelerate
the CLINUVEL Group’s
research program
• Upon final regulatory inspections and certification, the
laboratories will operate according to Good Laboratory
Practice under ISO 17025
22
Singapore Research & Development Centre
ROLE OF VALLAURIX
• CLINUVEL Group’s centralised research, development
and innovation centre
• Principle objective is to commercialise innovative
pharmaceuticals and new over-the-counter
(OTC)
product lines which complement the specialised field
of medicine on which the Company has focussed
• Operates key functions of:
○ Advanced Analytical Chemistry;
○ Materials Science;
○ Regulatory Chemistry-Manufacturing-Control;
○ Quality Assurance;
○ Good Laboratory Practice;
○ Informatics and Computational Modelling;
○ Pharmaceutical and Formulation Science;
○ Analytical Sciences;
○ Comparative Medicine; and
○ ASEAN regulatory affairs
• Integral to support the strategy to become a diversified
biopharmaceutical company
• Part of CLINUVEL’s strategy to integrate key functions
‘in-house’
THE PEOPLE
• Committed, well qualified professional scientists and
analysts
• Expertise
across
development, analysis, and support
product
and
formulation
• Capable and diverse to support the research program
THE RESEARCH PROGRAM
• Focus on molecular profiling, peptide chemistry, and
polymer and formulation sciences
• Key projects are:
○ Pilot launch of OTC product line to target groups;
○ Establish stability dataset and commission
manufacturing
liquid
formulation of afamelanotide (announced in July
2020); and
for PRÉNUMBRA®, a
○ Formulation of second-generation melanocortins,
and
phimelanotide
CUV9900,
including
parvysmelanotide
23
DIRECTORS’ REPORT
The Directors of the Board present their report on the Company
for the financial year ended 30 June 2020 and the Auditor’s
Independence Declaration thereon.
DIRECTORS
The names of Directors in office during or since the end of the year
are set out below.
WILLEM BLIJDORP
Non-Executive Director, Funda
Appointed 21 January 2015, Chair since 30
November 2019
Background
Mr Blijdorp is an internationally recongnised entrepreneur who
has helped build the B&S Group, one of the largest global trading
houses, in a period spanning three decades. Mr Blijdorp has
led B&S’s growth, with the Dutch group focused on specialty
distribution services to difficult to serve markets. The B&S Group
has global reach and is a leader in its market sector.
Formerly B&S Group’s CEO, Mr Blijdorp now serves on its
Supervisory Board and is a majority shareholder, focussing on the
Group’s development and expansion strategy. He led and oversaw
the Group’s initial public offering on Euronext Amsterdam in March
2018.
In 2014 Mr Blijdorp was recognised for his expertise in merger
and acquisitions and commercial leadership as the Ernst & Young
Entrepreneur of the Year in the Netherlands, and runner-up in its
European Union awards.
Since becoming a director of CLINUVEL in 2015, Mr Blijdorp has
provided a valuable contribution to setting the Group’s long-term
strategy for product commercialisation, growth, and future plans to
further diversify CLINUVEL.
Relevant Skills
• entrepreneurship, commercial prowess
• general management
• financial management
• experienced in listed company Directorships
Committee Membership
Chair of the Remuneration Committee
Chair of the Nomination Committee
Member of the Audit and Risk Committee
Current Directorships and other interests
Director of the Supervisory Board of the B&S Group (the
Netherlands)
Other listed company Directorships (last 3 years)
None
Relevant interest in Shares and performance rights
Shares: 1,743,118
Performance Rights: -
24
PHILIPPE WOLGEN
Chief Executive Officer, MBA, MD
Appointed
to Board 1 October 2005,
appointed Chief Executive Officer 28
November 2005
Background
Under Dr Wolgen's leadership since late 2005, a long-term strategy
for CLINUVEL was devised. The lead product SCENESSE®
(afamelanotide 16mg) was reformulated, its medical application
identified, European marketing authorisation was obtained in
2014 and distributed in the European Economic Area from June
2016. Dr Wolgen oversaw the submission of the scientific dossier
to the US Food & Drug Administration (FDA) under a New Drug
Application, which was approved in October 2019. First treatment
of US patients commenced in April 2020. SCENESSE® is the first
melanocortin drug to have completed a clinical trial program and
obtain marketing authorisation in two major markets.
Dr Wolgen has been instrumental in the Company’s corporate
turnaround, rebuilding a share register of long-term professional
and institutional investors. He led CLINUVEL to attract more than
AU$110 million in investments, his international contacts and
network contribute to the strategic support CLINUVEL enjoys
globally.
Under his tenure a business model was adopted to develop
and launch SCENESSE®, guiding the Group through a complex
pharmaceutical product development program. His overall
business execution and exact financial management is viewed as
exemplary within the life sciences industry and the funding strategy
he led is considered unique within the sector.
Dr Wolgen is currently leading the Group’s expansion, with an
immediate focus on the US and the further development of the
product pipeline for various market segments. His focus has
been to establish a professional management team to execute
the corporate objectives set and prepare the next generation of
managers.
Dr Wolgen’s long track record speaks to a strongly focussed,
competitive and conscientious professional who is known to
persevere in meeting challenging business objectives. He holds
an MBA from Columbia University, NY. Trained as a craniofacial
surgeon, Dr Wolgen obtained his MD from the University of Utrecht,
the Netherlands.
Relevant Skills
• pharmaceutical research & development, commercialisation
• clinical expertise
• commercial knowhow, entrepreneurial outlook
• executive management, corporate turnarounds
• financial management
• capital market understanding
• experienced in listed company Directorships
Current Directorships and other interests
None
Other listed company Directorships (last 3 years)
None
Relevant interest in Shares and performance rights
Shares: 3,504,696
Performance Rights: 1,513,750*
*Performance Rights were issued to Dr Wolgen on 26 August 2020,
consequent to shareholder approval at the 2019 AGM
BRENDA SHANAHAN
Non-Executive Director, BComm,
FAICD, ASIA
Appointed 6 February 2007
Background
Mrs Shanahan is a pioneer in the Australian finance community.
The first female stockbroker, Mrs Shanahan has also spent
more than two decades working and investing in medical
R&D and commercialisation. She is currently a non-executive
director of Phoslock Environmental Technologies Ltd (ASX: PET).
Mrs Shanahan is also a non-executive director of DMP Asset
Management Ltd and SG Hiscock Ltd, a director of the Kimberly
Foundation of Australia Ltd, and Chair of the Aikenhead Centre for
Medical Discovery in Melbourne.
Previously Mrs Shanahan was a member of the Australian Stock
Exchange and an executive director of a stockbroking firm, a fund
management company and an actuarial company. Until 2017, she
was Chair of St Vincent’s Medical Research Institute and also a
non-executive director of Challenger Limited (ASX: CGF). Mrs
Shanahan was formerly Chair of Challenger Listed Investments
Ltd, the reporting entity for four ASX listed firms and formerly a
non-executive director of Bell Financial Group (ASX: BFG). Mrs
Shanahan also has served on and chaired various Audit and Risk
Committees throughout her career, including Challenger Financial
Services Group Ltd, Bell Financial Group, Victoria University, JM
Financial Group Ltd, SA Water, AWB International Ltd, BT Financial
Group and V/Line Passenger. She is the current Chair of of the
Audit Committee for Phoslock Environmental Technologies Ltd
(ASX: PET).
Mrs Shanahan joined CLINUVEL in 2007, and was Non-Executive
Chair of the Board from late 2007 until July 2010. Her depth of
experience across global markets and medical research provides
significant value to the current Board and Group.
Relevant Skills
• research & development in life sciences
• capital market understanding
• executive management
• experienced in listed company Directorships
Committee Membership
Chair of the Audit and Risk Committee
Member of the Nomination Committee
Current Directorships and other interests
Chair of the Aikenhead Centre for Medical Discovery, Melbourne
Director of SG Hiscock Ltd
Director of DMP Asset Management Ltd
Director of Kimberly Foundation of Australia Ltd
Other listed company Directorships (last 3 years)
Phoslock Environmental Technologies Ltd (ASX: PET, since 2017)
Bell Financial Group (ASX: BFG, from 2012 to 2018)
Challenger Limited (ASX: CGF, from 2014 to 2017)
Relevant interest in Shares and performance rights
Shares: 258,969
Performance Rights: 25,000
Directors’ Report
KAREN AGERSBORG
Non-Executive Director, MD
Appointed 29 January 2018
Background
Dr Agersborg is a Board-Certified Endocrinologist in Pennsylvania,
USA, currently serving as Clinical Endocrinologist at Easton
Hospital, Steward Health, specialising in Endocrinology, Diabetes
& Metabolism. Dr Agersborg had previously worked at Reading
Hospital, West Reading and at Suburban Hospital, Norristown
as Clinical Endocrinologist and served as Chief, Endocrinology,
Diabetes, Metabolism at Chestnut Hill Hospital.
Dr Agersborg had an extensive career in managing commercial
sales & distribution at Wyeth Pharmaceuticals (formerly Ayerst
Laboratories). Dr Agersborg has played an integral role in setting
the CLINUVEL Group’s US commercial strategy, resulting in the US
FDA’s approval of SCENESSE® in October 2019.
Relevant Skills
• pharmaceutical research & development, commercialisation
• relevant knowledge on melanocortins, clinical expertise
• commercial knowhow in US pharmaceuticals
• general management
• experience in private company Directorships
Committee Membership
Member of the Remuneration Committee
Member of the Nomination Committee
Current Directorships and other interests
Member of the American Osteopathic Association
Fellow of the American Association of Clinical Endocrinologists
Fellow of the American College of Osteopathic Internists.
Doctorate of Osteopathic Medicine
Other listed company Directorships (last 3 years)
None
Relevant interest in Shares and performance rights
Shares: 5,500
Performance Rights: -
SUSAN (SUE) SMITH
Non-Executive Director, Dipl ClinRisk
Appointed 23 September 2019
Background
Mrs Smith manages an established consultancy business,
providing advisory services to a range of healthcare organisations,
investors and boards of directors. Mrs Smith has also hadled a
distinguished career, serving for 14 years as Chief Executive Officer
of The Princess Grace Hospital, London, and 11 years as the Chief
Executive Officer of The Portland Hospital for Women and Children,
London. Mrs Smith’s specific expertise is in the implementation of
operational strategies within complex and acute care environments,
and in the interaction with healthcare authorities and UK regulators.
Her most recent role was as the Chief Executive Officer of the
Independent Doctors Federation, a membership organisation
representing practicing physicians within the UK independent
healthcare sector.
Her past experience is now successfully translating into a diverse
portfolio with non-executive director appointments having been
successful in completing the Financial Times Non-Executive
Director Advanced Professional Diploma. She is Board Chair
25
Directors’ Report
of the Evewell (Harley St) Ltd, a fully integrated centre of medical
excellence dedicated to caring for and protecting all aspects of
fertility and gynaecological health. She also sits on an Advisory
Board for Sweettree Home Care Services providing the bridge
between hospital and community care. In the face of the
ever-changing healthcare market Mrs Smith fosters first class
relationships with a wide range of healthcare stakeholders to build
first class services for patients.
Relevant Skills
• executive healthcare management
• leadership and strategy setting in complex environments
• risk management and governance
• customer relations
Committee Membership
Member of the Remuneration Committee
Member of the Nomination Committee
Current Directorships and other interests
Non-Executive Board Chair of the Evewell (Harley St) Ltd
Non-Executive Director of Elite Medicine Ltd
Trustee of the HCA International Foundation
Other listed company Directorships (last 3 years)
None
Relevant interest in Shares and performance rights
Shares: -
Performance Rights: -
JEFFREY ROSENFELD
AC, OBE
Non-Executive Director
Appointed 26 November 2019
Background
Prof Rosenfeld is an internationally recognised neurosurgeon with
extensive experience in senior healthcare medical and research
executive roles and a distinguished and decorated career in
the Australian Army. He is a retired Major General and a former
Surgeon General, Australian Defence Force-Reserves. He has
served on eight deployments to Rwanda, Iraq, Solomon Islands,
Bougainville and East Timor. He was the Founding Director
of Monash University Institute of Medical Engineering (MIME-
Melbourne). He is developing a bionic vision device to restore vision
in blind people and he is also a leader in brain injury research. Prof
Rosenfeld was Director of Neurosurgery at the Alfred Hospital
for fifteen years, concurrently holding Professor and Head of
the Department of Surgery at Monash University, for nine years.
Prof Rosenfeld is active in many community organisations and
champions various charitable causes. Prof Rosenfeld is an active
volunteer in the Australian-Aid funded Pacific Islands Project which
transfers clinical skills and knowledge to healthcare professionals in
Papua New Guinea, Fiji and the Solomon Islands.
In 2018, Prof Rosenfeld was awarded the Companion of the
Order of Australia, which is Australia’s highest civilian honour, the
Meritorious Service Medal of the United States of America in 2017
and Officer in the Order of the British Empire in 2013.
Relevant Skills
• lifetime experience in providing healthcare
• clinical research and development
• board and Committee oversight and governance
• leadership and management
Committee Membership
Member of the Audit and Risk Committee
Member of the Nomination Committee
26
Current Directorships and other interests
Director of Vision for TBI Ltd
Former Major General, Australian Defence Force (Army Reserve)
Other listed company Directorships (last 3 years)
None
Relevant interest in Shares and performance rights
Shares: 1,693
Performance Rights: -
STAN MCLIESH
Non-Executive Chair, B Ed
Appointed 12 September 2002, Ceased
Directorship 30 November 2019
Background
Mr McLiesh has vast experience across pharmaceutical research
and development, and distribution and commercialisation of
pharmaceutical products. He was closely involved in the transition
of CSL Limited (ASX: CSL) from government ownership through
corporatisation to a highly successful listed company as General
Manager. During this time, he helped CSL expand its international
reach, brokering numerous
in-licensing agreements, M&A
transactions and partnerships with multinational firms, becoming
the most successful Australian life-sciences company. Mr McLiesh
has previously served in non-executive roles in the medical device
field.
As Chair of CLINUVEL from 2010 to 2019, Mr McLiesh was involved
in formulating the successful European commercial strategy for
SCENESSE® (afamelanotide 16mg) and overseeing the continuity
and stability of the CLINUVEL Group.
He has taken a leading role in setting US commercial strategy,
culminating in US FDA’s approval of SCENESSE® in October 2019.
His ability to navigate through crises and oversee clear pathways
towards finding solutions made him highly capable to steer
management over many years, up until his retirement in November
2019.
Relevant Skills
• pharmaceutical research & development, commercialisation
• commercial acumen
• general management
• experienced in listed company Directorships
Committee Membership
Member of the Remuneration Committee
Member of the Audit and Risk Committee
Member of the Nomination Committee
Current Directorships and other interests
Vice President of the Board of Ivanhoe Girls
Grammar School, Melbourne
Other listed company Directorships (last 3 years)
None
Relevant interest in Shares and performance rights
Shares: 187,774
Performance Rights: -
INFORMATION ON COMPANY SECRETARY
DARREN KEAMY
Company Secretary, Chief Financial Officer
Qualifications: BComm, CPA, GradDip ACG
Mr Keamy, a Certified Practicing Accountant and Company
Secretary, joined CLINUVEL in November 2005 and became
Chief Financial Officer of the Group in 2006. He has previously
worked in key management accounting and commercial roles in
Amcor Limited and has experience working in Europe in financial
regulation and control within the banking and retail pharmaceutical
industries. He has overseen the financial management of the Group
since 2005, played a role in raising AUD$95 million in capital, and
assisted the steering of the Group from a loss-making, pre-revenue
position to a commercially focussed profitable enterprise.
Directors’ Report
MEETING OF DIRECTORS
The following table summarises the number of and attendance at
all meetings of Directors during the financial year:
Director
Board
Audit & Risk Committee
Remuneration Committee
Nomination Committee*
Mrs. B.M. Shanahan
Mr. S.R. McLiesh
Dr. P.J. Wolgen *
Mr. W. A. Blijdorp
Dr. K. A. Agersborg
Mrs. S. E. Smith
Prof J. V. Rosenfeld
A
10
5
10
10
10
7
5
A
3
2
1
2
-
B
10
5
10
10
8
7
5
B
3
2
1
2
-
A
-
2
2
2
-
B
-
2
2
2
-
A
2
2
-
2
2
1
B
2
2
-
2
2
1
Column A indicates the number of meetings held during the period the Director was a member of the
Board and/or Board Committee.
Column B indicates the number of meetings attended during the period the Director
was a member of the Board and/or Board Committee.
During 2019/20 changes to the composition of the Audit and Risk Committee and the Remuneration Committee saw Dr Wolgen be replaced by non-executive Directors.
PRINCIPAL OBJECTIVES AND ACTIVITIES
Objectives
CLINUVEL PHARMACEUTICALS LTD (CLINUVEL) is a global
biopharmaceutical company
focussed on developing and
delivering treatments for patients with a range of genetic and
vascular disorders. CLINUVEL’s pioneering work in melanocortins
aims to translate scientific breakthroughs to innovative medical
solutions for complex problems and thus deliver lifelong care and
novel products to patients and consumers.
CLINUVEL’s expertise in understanding the interaction of light and
human biology is focussed on preventing the symptoms of genetic
diseases related to the exposure to the visible light spectrum and
UV radiation along with addressing a range of depigmentation
disorders. These patient groups range in size from 5,000 to 45
million worldwide.
CLINUVEL has developed and launched the world’s first systemic
photoprotective drug in Europe and the USA. During the year,
the scope of CLINUVEL’s research and development program
was extended to the application of melanocortins to treat acute
disorders and vascular anomalies.
The long-term financial objective of the Group is to maximise
company value through the distribution of treatments to patients in
need. The key to long term sustainable performance is:
• continuing the successful research and development of a
portfolio of assets centred around its key drug candidate
SCENESSE® and its melanocortin derivatives;
• the successful commercialisation, manufacture and distribution
of these products; and
• maintaining financial discipline and stability.
A key facilitator of these objectives is the ability to attract funding to
support CLINUVEL’s activities, should the need arise.
Performance Indicators
Management and the Board monitor the overall performance of the
Group in the achievement of its objectives in relation to a defined
strategic plan and annual operating and financial budgets.
The Board, with Management, have identified a range of key
performance indicators (KPIs) that are used annually to monitor
performance. Key managers monitor performance against these
KPIs and provide regular reports to the Board for review, feedback,
and guidance, as necessary. This enables the Board to actively
monitor and guide the Group’s performance.
Activities
The principal activities of the Group during the financial year were
to:
• manage the commercial distribution in Europe of its leading
drug product SCENESSE® (afamelanotide 16mg) for the
treatment of a rare, genetic metabolic disorder, erythropoietic
protoporphyria (EPP);
• establish commercial distribution of SCENESSE® in the USA
following the approval of the US Food and Drug Administration
(FDA) in October 2019 of SCENESSE® for the treatment of
adult EPP patients;
• progress the ongoing research and development of its product
pipeline for a range of severe disorders, including:
○ SCENESSE® in combination with narrowband ultraviolet
B (NB-UVB) phototherapy and topical pharmaceutical
formulations of melanocortin analogues for the treatment of
the skin depigmentation disorder, vitiligo;
○ topical over-the-counter formulations for photoprotection of
the skin;
○ medicinal photoprotection through DNA repair of the skin;
and
○ the development of PRÉNUMBRA®, a new liquid formulation
of afamelanotide for the treatment of critical indications to
be announced.
There was no significant change in the nature of the Group’s
activities during the financial year.
REVIEW OF OPERATIONS AND FINANCIAL
CONDITION
Key Features of Business Operations
There are several key features of CLINUVEL’s business operations:
• The commercial operations of the Group are undertaken in
Europe and the USA.
27
Directors’ Report
○ Since June 2016 CLINUVEL has distributed SCENESSE®
to EPP patients through accredited Expert Centres,
working within the commitments agreed with the European
Medicines Agency (EMA) as a condition for continuous
marketing authorisation.
○ Since April 2020, CLINUVEL has been treating patients
with EPP through accredited Specialty Centers in the US,
in accordance with the approval of the FDA, granted in
October 2019.
• The net price per unit of SCENESSE® is uniform across the
jurisdictions in which it operates.
○ Distribution costs specific to each jurisdiction determines
the gross price of SCENESSE®.
○ This reflects the Group’s values of fairness and equitable
access to treatment by all patients.
• SCENESSE® is manufactured in the USA by a sole contract
manufacturer and is distributed by the Group directly to
accredited Expert Centres in Europe and Specialty Centers in
the USA.
• CLINUVEL’s cash receipts are markedly higher in the northern
hemisphere during spring and summer when ambient light is
more intense and demand for treatment from EPP patients is
higher than in autumn and winter.
• The Group has an ongoing clinical interest to further develop
SCENESSE® and its derivatives with a focus on vitiligo, a skin
depigmentation disorder; and DNA repair of the skin, in an
undisclosed indication.
the development of a second
• The research and development program has been extended
through
formulation of
afamelanotide, PRÉNUMBRA®, with a focus on its application
to acute disorders and vascular anomalies in indications to be
announced.
• The Group’s product development program is conducted
through its fully owned Singaporean subsidiary, VALLAURIX
PTE LTD (VALLAURIX).
• The Melbourne headquarters of the Group covers the key
regulatory affairs, scientific programme, finance, and investor
relations functions, whilst the United Kingdom office co-
ordinates global operations, communications, and marketing.
Review of Operations
The review of operations for FY2020 focuses on the distribution
of SCENESSE® in Europe and the USA, ongoing work to obtain
regulatory approval of SCENESSE® in new jurisdictions, the
expansion of the Group’s laboratory facilities in Singapore, and the
progression of the product pipeline to develop SCENESSE® and
its analogues for the treatment of patients with a range of severe
genetic, skin, and vascular disorders.
Distribution of SCENESSE® in Europe
The supply of SCENESSE® to EPP Expert Centres across key
European countries, including under a special access scheme to
Switzerland, continued in the year ended 30 June 2020 (FY2020).
During the corona-pandemic, the majority of EPP Expert Centres
continued prescription of SCENESSE® due to the ongoing clinical
demand, while a small number of Centres either deferred orders or
reduced order sizes in the initial months of the COVID infections.
These few Centres were not able to provide treatment access
to patients, or patients were unable to travel to Centres. Despite
the uncertainty surrounding the pandemic, patient demand for
SCENESSE® remained high, with existing patients continuing to
seek treatment and new patients receiving treatment for the first
time.
We continue to progress reimbursement of the cost of treatment
with authorities in other European countries.
Distribution of SCENESSE® in the USA
On 8 October 2019, the FDA approved SCENESSE® to increase
pain free light exposure in adult patients with a history of phototoxic
reactions from EPP. This was a milestone approval for the Group
after 15 years of research and development of SCENESSE® for
EPP which had an unmet medical need for treatment. Following the
28
FDA’s approval, the Group activated its implementation plan for US
operations and within six months of approval, completed the key
pre-distribution logistics to commence treatment. These logistics
included establishing the business infrastructure, identification
of the correct codes for treatment to ensure smooth operations
and reimbursement, initial insurer discussions and agreement
to reimburse the cost of treatment, and identification of the initial
Specialty Centers to be accredited and trained by CLINUVEL.
In April 2020, CLINUVEL commenced distribution of SCENESSE®
for adult EPP patients with the first US insurance companies
initiating reimbursement for treatment under Prior Authorization
(PA). Over 40 insurance companies have now agreed to consider
SCENESSE® under PA. CLINUVEL has established a Savings
Program to assist with the out-of-pocket expenses of patients and
provides a dedicated patient and healthcare professional website to
facilitate patient access to treatment. CLINUVEL actively supports
patients and Specialty Centers in their applications to insurance
companies for approval to reimburse the cost of treatment of
SCENESSE®.
Our plan is to accredit 30 Specialty Centers over a phased period.
At the time of writing, 17 Specialty Centers have been accredited,
which is ahead of our planning. Cash receipts for the financial year
ending 30 June 2020 did not include any receipts from the supply
of SCENESSE® in the US market. The Company expects, in these
early stages of US launch, that payment terms may be longer in
duration than the 30 to 60 days average length of payment term
in Europe. Modest revenue was recorded in the first few months
of treatment to 30 June 2020 and the outlook for the US business
is underpinned by the progress being achieved in the number of
Specialty Centers accredited and patients treated.
SCENESSE® for EPP in New Jurisdictions
With regulatory approvals from the EMA in Europe and more
recently, the FDA in the USA, and information on the patient
experience
its post-marketing
commitments, the Group continues to work towards gaining
regulatory approval for SCENESSE® for EPP patients in other
important markets. This reflects our commitment to provide EPP
patients worldwide with access to SCENESSE®.
in Europe generated
from
In October 2019, the Australian Therapeutic Goods Administration
(TGA) granted SCENESSE® the right to be filed under its priority
registration process. In December 2019, CLINUVEL applied to the
TGA for SCENESSE® to be registered in the Australian Register of
Therapeutic Goods (ARTG). If registered, SCENESSE® would be
made available by prescription in Australia for the prevention of
phototoxicity in adult patients with EPP. In January 2020, the TGA
accepted the registration dossier for review. A decision is expected
during the fourth quarter of calendar 2020. In parallel, interactions
with the Pharmaceutical Benefit Scheme (PBS) have occurred
to exchange information on risk, benefit, and budget impact in
Australia. The aim is to assess whether SCENESSE® can become
listed on the PBS in Australia. It is expected that the drug will be
made available exclusively through outpatient departments of
speciality centres since it will be administered by specialists only.
In April 2020, the Group commenced a Collaboration Agreement
to launch SCENESSE® (afamelanotide 16mg) under a Named
Patient Program (NPP) for the treatment of EPP patients in the
People’s Republic of China. The collaboration with HK Winhealth
Pharma Group Co. Limited (Winhealth) focuses on facilitating early
access for Chinese EPP patients while collecting data for a new
drug application (NDA) to the Chinese National Medical Products
Administration (NMPA). CLINUVEL and Winhealth will work with
prominent hospitals in China to facilitate EPP patient treatment. The
NPP will include up to 10 Chinese EPP patients – treated according
to US and EU protocols – who will be evaluated during a defined
period. Local subsidies are available to enable eligible EPP patients
to receive treatment. Following treatment with SCENESSE® under
the NPP, CLINUVEL and Winhealth will evaluate the safety and
effectiveness in Chinese EPP patients. The collaboration will also
focus on subsequent registration of SCENESSE® on the National
Drug Reimbursement List. On a prevalence basis, an estimated
5,000 Chinese residents suffer from EPP, for which there is no
approved therapy.
An application was also lodged during the year for regulatory
approval to distribute SCENESSE® in a non-EU country, and
submissions to regulatory authorities in Japan and Latin America
are planned.
Expansion Singapore Laboratory
During FY2020, CLINUVEL invested in the further expansion of
its facilities in Singapore with new state of the art and expanded
laboratories to further progress R&D on novel melanocortins, and
prescription and over-the-counter products. In February 2020, the
Group announced that the research and development capacity of
its wholly owned subsidiary, VALLAURIX, will be expanded through
both a new biological and analytical laboratory, which are planned
to work according to both ISO17025 and Good Laboratory Practice
(GLP) specifications. CLINUVEL has added new highly skilled local
personnel to its existing team and specialised technical laboratory
equipment to further enhance the progress of its product pipeline.
VALLAURIX has received support of its expansion plan from the
Singapore Economic Development Board (EDB) with an award
under their Research Incentive Scheme for Companies (RISC).
This is part of the Government of Singapore’s incentives to assist
Singaporean businesses to develop their research capacity
to advance high valued technologies. The EDB award is up to
S$500,000 (A$547,000) over 3 years. The opening of the laboratory
was planned for July 2020, but due to the introduction of prudent
regulations by the Singapore Government to contain the corona-
pandemic, it is expected the new facilities will be completed by the
end of the third quarter of calendar year 2020.
Product Pipeline
The Group has an extensive product development pipeline that
encompasses the application of SCENESSE® and other novel
treatments for patients with severe genetic, skin, and vascular
disorders which lack therapeutic alternatives.
The pipeline includes research and development into:
• a paediatric formulation of SCENESSE® for EPP;
• SCENESSE® for adult vitiligo patients;
• next generation products based on melanocortin analogues
CUV9900 and VLRX001, currently being evaluated as an
adjuvant maintenance therapy in vitiligo, with the intention
of developing these analogues for medicinal purposes to be
administered topically;
• a
range of over-the-counter products
for general
photoprotective application;
• the use of melanocortins in DNA repair of the skin; and
• the application of a newly developed second formulation of
afamelanotide, PRÉNUMBRA®, a liquid controlled-release
formulation, to be evaluated in clinical trials for acute disorders
and vascular anomalies.
The Group continues to pursue a clinical program to evaluate
the effectiveness of SCENESSE® to activate and repopulate
melanocytes within vitiliginous lesions (depigmented skin areas) and
achieve repigmentation in combination with NB-UVB phototherapy
in patients with vitiligo. In February 2020, the Group requested a
Type C Guidance Meeting with the FDA and they consented to a
meeting held on 29 April 2020. The purpose of the meeting was
to seek agreement on the design of a multicentre Phase IIb vitiligo
clinical study (CUV104) and the data package necessary to support
a supplemental New Drug Application (sNDA) filing for SCENESSE®
in vitiligo. Following the meeting, CLINUVEL is proceeding with
the FDA and clinical experts to finalise the documentation and
clinical trial protocol (CUV104) to advance SCENESSE® as the first
systemic repigmentation agent in North America.
Subject to acceptance of the clinical protocol by the FDA, and
depending on acceptable results on the ongoing safety and
efficacy in its vitiligo program, CLINUVEL would seek to file a sNDA
for SCENESSE®. A sNDA, referred to as an “efficacy supplement”,
is required to add a new indication to the labelling of an approved
drug in the USA, with the submission consisting of clinical data
supporting the new indication and any additional studies which
may be required to support the efficacy and safety in the new
indication.
Directors’ Report
Scientific advancements and CLINUVEL’s programs have shown
that afamelanotide can assist in the repair of cellular DNA damage
caused by exposure to ultraviolet radiation. CLINUVEL is working
to evaluate this effect in humans, with protocols prepared in target
patient populations currently pending approvals.
the development of a second
In July 2020, at the start of the new financial year, the Group
announced
formulation of
afamelanotide, PRÉNUMBRA®. This
liquid controlled-release
formulation is aimed at dosing flexibility as part of the active life-
cycle management of afamelanotide to address clinical needs in
acute disorders and vascular anomalies. The indications of focus
are to be announced when ethics committee and regulatory
approvals are held. The Group has secured the intellectual property
rights for the dosage form in the identified indications, as well as
the international trademarks for PRÉNUMBRA®.
Financial Review
The financial year ended 30 June 2020 marks the completion of the
Group’s fourth consecutive year of achieving a net profit, a positive
cash flow result and increased revenue growth.
Financial Summary
Consolidated Entity
Revenues and Other Income
Net Profit before income tax
Profit after income tax expense
Basic earnings per share
Net tangible assets backing per
share
FY 2020
FY 2019
$
$
33,909,670
32,498,470
+4%
+24%
13,136,471
18,114,827
-27%
+40%
16,646,859
18,134,160
-8%
0.338
-10%
1.3831
19%
+37%
0.376
+36%
1.158
+42%
Dividends
2.5 cents
2.0 cents
1 This has been adjusted to reflect the requirement of Australian Securities and Investments
Commission to exclude right of use assets arising from the application of AASB 16 ‘Leases’
from the calculation of net tangible assets.
Note: CLINUVEL has one operating segment for reporting purposes.
The result for the Group for FY2020 was a $13.136 million profit
before tax, compared to $18.115 million for FY2019, a 27%
decrease. The result reinforces the Group’s primary strategic focus
to grow its commercial operations of SCENESSE® in the EU and
the US and to prepare for future product growth and business
expansion. Total expenses
increased by 44% year-on-year,
complemented by a combined increase in total revenues, interest
income and other income of 4% year-on-year.
Net Cash provided by Operating Activities was $14.188 million for
FY2020. After the deployment of cash in investing and financing
activities, net cash added $12.478 million to cash and cash
equivalents on the balance sheet. Cash reserves have increased
steadily since 2016, from $14.170 million to the 30 June 2020 level
of $66.747 million, a 44% compound annual growth rate over the
last 4 years.
Revenues
The Group achieved Total Revenues of $32.565 million for FY2020,
a 5% increase on the prior year revenue result of $31.048 million.
A comparison of the FY2020 reported and constant currency
results against the FY2019 reported results for Commercial Sales
and Special Access Scheme Reimbursements is shown below:
29
Directors’ Report
AU $ million
Commercial Sales -
Europe
Commercial Sales
– USA
SAS
Reimbursements –
SUI + Other
FY2020
Reported
FY2020
Constant*
FY2019
Reported
%
change
25.407
24.409
26.488
(7.9)
Growing revenues since initial launch(A$M)
0.899
n/a
n/a
-
FY2020
6.259
5.922
4.559
+29.9
FY2019
* FY2020 revenues converted to A$ monthly at the average conversion rate of the same
month used for FY2019
Commercial Sales - Europe
On a constant currency basis commercial sales revenues of
SCENESSE® in Europe decreased 7.9% for the year. The result was
driven by a combination of:
• EPP Expert Centres located in regions severely affected by
COVID19 either deferring or reducing orders at a time when
orders typically increase in the warmer months;
• EPP Expert Centres running down inventories, offset by
• Further increases in new patients enrolled under the post-
authorisation safety setting and treated by EPP Expert Centres
before and during lockdown.
Despite difficult conditions from the coronavirus pandemic in
Europe to access patients during the second half of FY2020 when
demand for SCENESSE® generally increases, EPP Expert Centres
continued to prescribe SCENESSE® to existing and to new patients
receptive to the treatment.
Whilst the price of SCENESSE® remained constant in FY2020, in
line with CLINUVEL’s policy to charge a net uniform price across
all European countries, commercial sales in Europe were positively
impacted by favourable foreign exchange rate movements by
$0.998 million.
Commercial Sales - USA
First commercial sales occurred in the latter part of FY2020 to
one EPP treatment centre. Reimbursement of SCENESSE® was
initiated by first-mover US insurance companies for treatment
under Prior Authorization ('PA') arrangements. More than forty
insurers have agreed to reimburse SCENESSE® either via PA or
through acceptance of the drug on individual formularies.
Reimbursements – Special Access Schemes
The distribution of SCENESSE® under Special Access Schemes
continued to provide a preventative treatment for adult EPP patients
primarily to Switzerland. SCENESSE® was also exceptionally
supplied outside Switzerland under a special access arrangement
whereby CLINUVEL received full cost compensation, linked to the
uniform price of SCENESSE® sold in Europe under the marketing
authorisation.
On a constant currency basis, sales reimbursements from special
access schemes increased 29.9% for the year. The result was
driven by:
• Growth in the average number of presciptions per patient
throughout the course of the year, and
• New patients receiving treatment for the first time
Other Income
Interest Revenue and Other Income
Interest received from funds held in bank accounts and term
deposits for the year ended 30 June 2020 was $0.563 million
compared to $0.565 million for year ended 30 June 2019.
The positive financial performance of the Group saw an increase
over the 12 months to 30 June of $12.478 million to its cash reserves.
Over the course of FY2020 the Company was able to transfer more
funds into higher-yielding Australian dollar fixed-rate term deposits.
The average amount of cash held in term deposits was 55% higher
than for FY2019. However, the higher cash balances were offset by
30
FY2018
FY2017
0
5
10
15
20
25
30
35
Commercial Sales EU
Commercial Sales US
Special Access Scheme
Reimbursements
Other Income
a lower interest rate yield it earned on holding interest-bearing term
deposits, averaging 95 basis points less year-on-year. The decrease
in interest rate yield reflected the impact of Australian government
monetary policy on term deposit rates on offer throughout the year.
The Group’s policy to maintain lower-yielding foreign currencies to
cover working capital requirements is reflected in this result. Funds
held in non-Australian dollar currency providing a natural hedge
against downward movement on the Australian dollar. The average
amount of funds held in non-Australian dollar currency in FY 2020
has remained stable, decreasing 4% on average when compared
to FY2019.
This exposure in holding funds in non-Australian dollar currency,
combined with revaluing end date trade debtors and creditors from
their original currency into Australian dollar presentation currency,
contributed to the Group reporting a gain of $0.537 million for
FY2020 (FY2019: $0.886 million gain).
The Group recorded other income of $0.127 million in government
grants received in Australia and Singapore to assist companies
responding to the economic impact of the COVID19 pandemic.
The Group also benefited from realising exchange rate gains on
transactions in non-Australian currency throughout the year of
$0.117 million.
Expenditures
Total Expenses for the Group for FY2020 were $20.773 million.
There was a deliberate and controlled increase in expenses of 44%
during the year compared to FY2019 to support the Company’s
strategic initiatives, including investment in the research and
development program for future organic growth.
The Group maintained its focus on its expenditure mix as it has
done throughout the SCENESSE® development program. Overall,
total R&D and commercialisation expenditures accounted for
46% of the Group’s total expense result for FY2020, compared
to 48% for FY2019. Whilst the expenditure mix showed a 2%
decline, the total expenditures on R&D and commercialisation
costs, comprising clinical study costs, drug formulation research,
manufacture and distribution, regulatory fees and research,
development and commercialisation-specific overheads such as
personnel, were $9.630 million in FY2020, increasing 40% from
$6.871 million in FY2019. The increase in these overall expenditures
reflects the Group’s focus throughout the year to further invest in its
commercial rollout to secure revenues in the EU and for the first-
time, the USA.
Expenditure Mix since EU product
launch
Directors’ Report
This expense result for FY2020 was driven by:
• Cost increases passed to the Group from its contract
manufacturer as part of FY2020 implant manufacturing
campaigns;
• Investment in process development of afamelanotide raw
material peptide manufacturing which had commenced in
FY2020;
100%
80%
60%
40%
20%
0
FY2017
FY2018
FY2019
FY2020
Clinical development
Licenses patents
and trademarks
Business marketing
& listing
Regulatory (Pre &
Post Marketing) &
Non-clinical
Drug formulation R&D
manufacture &
distribution
Clinical Regulatory &
Commercial overheads
General Operations &
Other
Clinical Development
Clinical development fees increased 102% from $0.091 million in
FY2019 to $0.185 million in FY2020.
Since the granting of market authorisation by the EMA in late
2014, the Group has prioritised its commercialisation activities in
the EU and in pursuing a regulatory approval in the USA ahead
of advancing its clinical trial program. This has been reflected in
expenses towards clinical development representing approximately
1% of total expenses in each year since the year of European
regulatory approval. Moving forward, the Group intends to invest
funds in its clinical activities, both in the use of SCENESSE® in
various therapeutic fields and in the clinical development and
testing activities of the new products and formulations as part of
the VALLAURIX operations.
This expense result for FY2020 was driven by:
• Increased clinical expert support services to advise on
initiatives on the expanded use of SCENESSE®, and
• Growth in product development and testing services in the
VALLAURIX operations under laboratory setting.
Drug Formulation R&D, Manufacture & Distribution
Expenses toward further research, development, manufacture and
optimisation of the implant drug formulation and the freighting and
distribution to the end user increased 52%, from $2.388 million in
FY2019 to $3.624 million in FY2020.
The Group continues to invest in its manufacturing supply chain
to prepare for future sales growth and to meet short-term and
long-term inventory requirements. During the year the Group
embarked on a manufacturing program to replenish raw material
peptide via a process change to support future scale-up. Validation
of the process change is underway and will extend into FY2021.
Continuous process improvement initiatives with the implant
contract manufacturer were a part of the batch manufacturing
campaigns that were conducted during FY2020. New distribution
centres with contracted parties and third-party service providers
were established in Europe to respond to the UK’s pending
departure from the EU as part of Brexit and to support supply to
US EPP Expert Centres. Drug formulation R&D also includes the
development work and usage of derivative peptide material within
the VALLAURIX Singapore operations.
• Growth in handling and freighting activities to support the
movement of serialised goods around Europe under the
Falsified Medicines Directive and to move goods in the US; and
topical
formulation development work
• Increased
in
formulations, recognising the usage of derivative peptides.
Clinical, Regulatory & Commercial (C,R&C) Overheads
C,R&C overheads increased 32% from $2.948 million in FY2019 to
$3.893 million in FY2020.
As part of CLINUVEL’s longer term objectives, increasing the C,R&C
personnel headcount is considered an essential investment to:
• drive the new product development program in its internal
innovation centre, VALLAURIX PTE LTD;
• establish and grow a commercial distribution program in the
USA;
• further sustain the ongoing commercial activities in Europe;
and
• investigate the further use of SCENESSE® in indications other
than EPP for the aim to expand its market potential.
FY2020 follows the trend since SCENESSE® was first launched in
Europe in 2016 of gradually increasing C,R&C staff count in those
key business areas to drive organic growth. As the Company
continues to expand, C,R&C overheads will follow.
This expense result for FY2020 was driven by:
• Increased global staff headcount across its scientific affairs
and commercial affairs teams.
Regulatory (Pre- & Post-Marketing) & Non-clinical
Regulatory and non-clinical fees increased 33% from $1.444 million
in FY2019 to $1.928 million in FY2020.
Fees related to regulatory affairs for both pre- and post-marketing
activities are directly related to the Group’s strategic focus in the
current year to meet its ongoing regulatory compliance activities to
distribute SCENESSE® in Europe and in the USA. These activities
include pharmacovigilance, safety reporting, PASS registry data
capture and dossier updates. SCENESSE® is established as
standard of care in a number of European countries. The first
treatment results from the European EPP Disease Registry study
were independently published during FY2020, showing ongoing
longer-term maintenance of the safety profile of SCENESSE® and
clinical benefit for patients receiving treatment.
Pre-marketing regulatory fees for FY2020 included finalising and
submitting an application to the Australian Therapeutic Goods
Administration for the use of SCENESSE® in EPP. An outcome is
anticipated in late 2020.
Regulatory and non-clinical fees also include the support required
for pricing dossier submissions and in responding to the pricing
negotiations.
This expense result for FY2020 was driven by:
• Growth in ongoing pharmacovigilance services; and
• Fees to prepare and respond to an increased number of audits
and inspections from various regulatory bodies including the
UK MHRA and FDA.
Business Marketing & Listing
Business marketing and listing fees increased 26% from $1.502
million in FY2019 to $1.889 million in FY2020.
The Group has been further investing in its marketing and brand-
building resources throughout the year. The focus to this business
31
Directors’ Report
function has been to build a greater online awareness of the
CLINUVEL brand in consideration of the US FDA’s approval of
SCENESSE®. In addition, as the product development program
in VALLAURIX progresses, resources and stragies are being
put in place to support future product launch. Brand-awareness
strategies were implemented during industry conferences at the
start of FY2020 but were later impacted by the onset of COVID19.
This expense result was driven by:
• Additional
in-house marketing
through more
personnel to support the building of CLINUVEL’s brand
exposure across multiple forums and the promotion of
VALLAURIX’s over the counter (OTC) products leading up to
launch; and
resources
• Increases to listing, share registry and corporate regulatory
fees tied to market capitalisation growth and investor mix.
Patents and Trademarks
Patent fees increased 69% from $0.305 million in FY2019 to $0.516
million in FY2020.
Incurring expenditures in patent and trademarks provides the
Group with essential protection and a competitive advantage over
others.
This expense result was driven by:
• Further fortification of the intellectual property position on the
new product development and complementary formulations
within the VALLAURIX business;
• Further maintaining, strengthening and validating the position
of the existing patent portfolio, including patent term extension
requests; and
• Investments in trademarks of new product names including
PRÉNUMBRA®, CLINUVEL’s new non-solid (liquid) presentation
of its drug afamelanotide.
Expenditure Growth since EU product
launch
25
20
15
10
5
0
General operations are reflective of the support function necessary
to ensure the execution of the Company’s demanding near-term
and long-term expansion strategy. Personnel costs including the
remuneration of senior management is considered part of general
operations along with IT, corporate support, legal, Board and
various non-cash items.
This expense result for FY2020 was driven by:
• Growth in non-cash expensing of share-based payments,
the accounting charge directly related to the approval by
shareholders of performance rights to the Managing Director
at the 2019 AGM;
to
• changes
remuneration arrangements of key
management personnel, impacting salary and employee
benefit expenses; and
the
• General increases to recruitment and insurances to support
business growth, offset by savings to legal-related fees,
principally from FY2019 including legal fees in connection to
matters related to the EMA marketing authorisation and in
responding to negotiations with England’s National Institute for
Health and Care Excellence (NICE).
Other Expenses
Other expenses decreased less than 1% from $0.755 million in
FY2019 to $0.750 million in FY2020.
Other expenses include travel and ad-hoc staff-related expenses.
Whilst there was a steep increase in travel related costs in the first
half of FY2020, staff mobility was severely restricted in the second
half of FY2020.
Deferred Tax Asset
The Group has brought to account a deferred tax asset (DTA)
relating to previously unrecognised prior period tax losses. resulting
in a credit to income tax benefit of $3.510 million (FY2019: $0.019
million). The amount of the DTA brought to account reflects:
• the benefit to be received from utilising unused tax losses
against the temporary differences that result in a deferred tax
liability for the business; and
• the expected utilisation of unused tax losses against probable
near term taxable profits.
Balance Sheet
One of the key objectives of the Company is to ensure its Balance
Sheet is sufficiently positioned and robust enough to allow
investment in future performance with a financial buffer to respond
to unexpected adverse events. The Company has continued to
preserve cash and cash equivalents held and, in doing so, is able to
withstand anticipated increases to short-term liabilities to support
the growth of the business and to sudden adverse economic
conditions following unexpected events such as the coronavirus
pandemic. This has been a deliberate and planned strategy,
reflecting CLINUVEL’s conservative approach to risk management.
FY2017
FY2018
FY2019
FY2020
Key Balance Sheet highlights of the year:
Clinical development
Licenses patents
and trademarks
Business marketing &
listing
Regulatory (Pre &
Post Marketing) &
Non-clinical
Drug formulation R&D
manufacture &
distribution
Clinical Regulatory &
Commercial overheads
General Operations &
Other
General Operations (incl Board)
Expenditures from general operations increased 61% from $4.923
million in FY2019 to $7.963 million in FY2020.
32
Cash Held
23%
Total Assets
31%
No Equity
Raised Since
2016
Trade
Payables
31%
Trade
Receivables
59%
No Debt
Date of
Payment
19 September
2019
Directors’ Report
The changes to the Balance Sheet was generated from positive
cashflows flowing into the company from its commercial distribution
program in the EU, increasing cash reserves by 23% from $54.269
million at FY2019 to $66.747 million at FY2020. Into FY2021,
cashflows are expected to be received from the distribution of
SCENESSE® in the US.
Total liabilities increased 52%, from $5.166 million to $7.873 million,
with no long-term debt. The ratio of the Company’s overall debt to
equity is 12%.
Shareholder Returns
Shareholder returns for FY2020 remain strong and are summarised
by:
Capital Structure
The Group is debt free and has a sound capital structure of ordinary
shares on issue plus unlisted securities in the form of conditional
performance rights.
CLINUVEL’s outstanding shares on issue increased to 49,410,338
shares to 30 June 2020. The increase of 449,705 issued shares
was through the exercise of performance rights under the Group’s
performance rights plans.
Dividends Paid or Recommended
Dividends paid or declared by the Group to members since the end
of the previous financial year were:
A$M
FY2020
FY2019
FY2018
FY2017
FY2016
Declared & paid
in 2019/20
Cents per
Share
Amount
Profit attributable to
owners of parent
Basic EPS
Dividends Paid
Dividends per
Share
Change in Share
Price YoY
$16.647
$18.134
$13.224
$7.180
($3.121)
Final
2.50
$1,224,021
33.8
cents
37.6
cents
27.7
cents
14.9
cents
(7.0)
cents
$1.224
$0.957
2.5
cents
2.0
cents
(24%)
206%
-
-
58%
34%
-
-
-
-
On 26 August 2020, the Board of Directors declared an unfranked
dividend of $0.025 per ordinary share in relation to the full year
ended 30 June 2020.
62%
28%
52%
(18%)
Cash from Operations and Other Sources of Cash
Overall, the Company generated $14.188 million in cash from its
operating activities in FY2020 (FY2019: $18.456 million)
Return on Equity
23%
32%
Shareholder returns have been generated in both the short-term and the
longer-term through:
• capital appreciation (Total Shareholder Return exceeding the Nasdaq
Biotech Index and ASX200 Healthcare Index since first product launch),
and
• dividend distribution in the past two financial years
Investments for Future Performance
The Group’s key objectives are to progress CLINUVEL as a world
leader in medicinal photoprotection and repigmentation and to
support the expansion into other, similar genetic and skin-related
disorders, as well as acute disorders and vascular anomalies. In
addition to the ongoing development of its active and expanded
product pipeline, the Group is open to consider the integration
of new functions and capabilities through one or more selective
acquisitions.
The Group has deployed working capital throughout the year to
prepare for future performance across the following areas:
People
Research &
Development
Clinical
• Created new roles across all business functions
• Supported senior management and key personnel in
ongoing professional development
• Relocating its laboratory to larger premises with
expanded analytical capabilities
• Fixed asset purchases
• Non-solid dosage formulation development
Activities in progress to obtain approvals to move into next
phase clinical studies to pursue potential new markets for
SCENESSE® in :
• Vitiligo
• Other indications (to be disclosed)
Manufacturing
• Program to manufacture raw material peptide via a
process change to support future scale-up
IP
• Continued to renew and maintain new and existing
patents to strengthen its intellectual property
position
Cash inflows from customer receipts decreased 9% to $29.288
million compared to $32.221 million for FY2019.
Cash outflows from operations increased by 14%, from $14.241
million to $16.281 million.
There were also cash outflows of $0.889 million for the acquisition
of property, plant and equipment, $0.262 million of repayment of
borrowing and leasing liabilities and $1.224 million for the payment
of an unfranked dividend to shareholders in relation to FY2019.
The Group's policy towards cash management is to:
• Hold cash in at-call bank accounts and place additional cash in
short-term term deposits providing favourable rates of interest;
and
• Actively manage foreign currency exposure, taking account of
recent and expected currency
foreign
currencies as a natural hedge, using foreign exchange forward
contracts and other foreign exchange risk management
products, as considered appropriate.
trends, holding
Cash Flows
Customer Receipts
Operating Outflows
Investing & Financing Outflows
Dividends Paid
Other
A$M
-20 -15 -10 -5
0
5
10
15
20
25
30
35
FY2020
FY2019
33
Directors’ Report
The Group’s financial liquidity as at 30 June 2020 is reflected in:
• A quick ratio of 11.0:1 (30 June 2019 11.8:1); and
• Cash and cash equivalents of $66.747 million, accounting for
88.8% of total current assets (FY2019: $54.269 million, 88.7%
of total current assets).
Material Business Risks
The following specific business risks are reviewed continually by
the Board and Management, as they have the potential to affect the
Group’s achievement of the business goals detailed above. This list
is not exhaustive.
Technology
Supply
Clinical &
Regulatory
Drug pricing
Intellectual
Property
Funding
Market
Competiton
Management
Despite obtaining marketing authorisations, those
products may ultimately prove not to be safe and/or of
clinical or other benefit.
Manufacturing processes may not result in product
batches meeting minimum specification levels, that
raw material components could not be sourced to
specification, that the manufacturing process may
encounter process issues not previously identified and
controlled, and of non-controllable disruptions to the
operations of the products’ contract manufacturers.
These factors may lead to non-supply of product and/or
adverse regulatory outcomes.
Clinical trials may not yield the expected and desired
results for the investigational medicinal product(s) to
obtain further regulatory approvals.
Third-party payors may not provide coverage or will
not be willing to accept the prices agreed with other
third-party payors, adversely affecting revenues and
profitability. Furthermore, reductions in government
insurance programs may result in lower prices for our
products and could materially adversely affect our
ability to operate profitably.
Future sales could be impacted to the extent that there
is not sufficiently robust patent protection across the
Group’s product portfolio that will prevent competitors
from entering the marketplace to compete with the
Group’s approved products. Also, competitors infringing
the Group’s IP rights may adversely impact the Group’s
ability to maximise the value to be made from product
commercialisation.
Cash outflows from its operations over the long-term
may be higher than cash inflows over the long-term.
Therefore, the ability of the Group to successfully bring
its products to market and achieve a state of consistent
positive cash flow is dependent on its ability to maintain
a revenue stream and to access sources of funding
while containing its expenditures.
New entrants could enter the same market to directly
compete against CLINUVEL's products with new
products proven to be safer, more effective and priced
lower than CLINUVEL's.
The Group’s corporate strategy could be impacted
adversely if the Group was not able to retain its
specialised knowledge and areas of expertise, key
management, members of staff and/or Board.
Impact of the Coronavirus Pandemic on CLINUVEL’s
Business
The impact of the coronavirus pandemic on the human population
across the globe is significant and has caused the most severe
contraction in the world economy since the 1929 Great Depression.
The impact and consequences on how we live, work, and interact
will be felt for years. CLINUVEL is no exception to being impacted
by the coronavirus pandemic. CLINUVEL’s business has proven
resilient and is relatively well positioned to manage the difficult
operating environment and progress its strategic initiatives.
34
Demand for SCENESSE®
Access to patients was affected particularly during the initial months
when population lockdowns across Europe were first instituted.
EPP Expert Centres either deferred orders or reduced order
sizes in the initial months of the COVID infections because they
were not able to provide treatment access to patients, or patients
were unable to travel to them. Notwithstanding the uncertainty
surrounding the pandemic, patient demand for SCENESSE® in
Europe remained strong, with existing patients continuing to seek
treatment and new patients receiving treatment for the first time.
CLINUVEL is conscious of the patients it serves and the anxiety
and uncertainty they face during the coronavirus-pandemic and it
has worked to continue to meet their demand for SCENESSE®.
Research and Development
CLINUVEL’s research and development program continued to
progress in FY2020. The operations of the laboratory facilities in
Singapore were restricted during the circuit-breaker period, with
some remote working required. The circuit-breaker also resulted in
minor delays to the laboratory expansion project, now set to be
completed by the end of the third quarter of calendar year 2020.
Supply of SCENESSE®
The sourcing, manufacturing and controlled distribution of
SCENESSE® continued without material disruption or delay from
the coronavirus pandemic. Raw material sourcing, manufacturing
activities and movement of goods were able to be conducted
without adversely impacting timeframes. CLINUVEL continuously
reviews its operations to assess ongoing supply of SCENESSE®
which may be impacted by the coronavirus pandemic.
CLINUVEL’s People
CLINUVEL has played a responsible role to assist the global effort
to manage the spread of COVID-19. CLINUVEL personnel have
adapted to work remotely, attending the office only as necessary
and when permitted under government regulations. Video-based
communications technology has been maximised whilst local and
international travel has been minimised. Diligence under a difficult
operating environment by the entire CLINUVEL team has seen
productivity and focus remain largely unaffected.
Summary
CLINUVEL recorded a fourth consecutive annual positive cash flow
and profit in FY2020. The impact of the corona-pandemic on the
business during the second half of FY2020 has been managed and
it has been able to respond to this challenge through the sound
foundations established over a long period of time by management
and the Board. CLINUVEL has entered FY2021 with cash reserves
sufficient to respond to unforeseen negative global economic
events.
Changes In The State Of Affairs
The Directors are not aware of any matter or circumstance not
otherwise dealt with in this report that has significantly or may
significantly affect the operations of the Group.
Significant Events After The Reporting Date
There has not been any matter, other than reference to the financial
statements that has arisen since the end of the financial year that
has affected or could significantly affect the operations of the
Group, other than:
• On 26 August 2020, the Board of Directors declared an
unfranked dividend of $0.025 per ordinary share.
Likely Developments And Expected Results
The Group launched SCENESSE® in Europe in June 2016. As part
of the conditions attached to the European marketing authorisation,
the Group operates an agreed long-term risk management plan
under the supervision of the EMA. The Group has been assisted
by third parties to support the European EPP Disease Registry to
monitor long-term safety and it will continue to invest in existing and
new personnel with the appropriate skills and expertise to maintain
the ongoing requirements of the post-authorisation program in
Europe. The ongoing requirements will remain in place until such
time the EMA decides these are no longer necessary.
Directors’ Report
Ultimately, the long-term financial objective of the Group is to
achieve and maintain sustainable profitability. Key to longer-term
profitability is not only continuing the successful research and
development of its portfolio of assets but also their successful
commercialisation, manufacturing and distribution, and the ability
to attract additional funding to support these activities should the
need arise.
Environmental Regulations And Performance
The Group’s operations are not regulated by any significant
environmental regulation under a law of the Commonwealth, or of a
State or Territory, or of any other jurisdiction.
Rounding Of Amounts
The Group is a type of company referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/91 and
therefore the amounts contained in this report and in the financial
report may have been rounded to the nearest $1,000,000 or in
most other cases, to the nearest dollar.
Indemnification And Insurance Of Directors And Officers
During or since the end of the financial year the Group has given or
agreed to indemnify, or paid or agreed to pay, insurance premiums
to insure each of the Directors against liabilities for costs and
expenses incurred by them in defending any legal proceedings
arising from their conduct while acting in the capacity of Director
of the Group, other than conduct involving wilful breach of duty in
relation to the Group. Details of the amount of the premium paid in
respect of insurance policies are not disclosed as such disclosure
is prohibited under the terms of the contract.
Directors' Benefits And Interest In Contracts
Since the end of the previous financial year no Director has
received or become entitled to receive a benefit (other than a
benefit included in the total amount of emoluments received or due
and receivable by Directors shown in the financial statements and
the remuneration report), because of a contract that the Director
or a firm of which the Director is a member, or an entity in which
the Director has a substantial interest has made with a controlled
entity.
Further information on these contracts is included in Note 20 to the
financial statements.
The Group has established a reference price for SCENESSE® as
part of its uniform pricing strategy in Europe and has entered into
pricing agreements with several European countries, and state and
private insurance groups. The Group has established a distribution-
focused workforce in Europe to support the increase in product
volumes and will continue to increase staff numbers as more
pricing agreements per country are established with payors, and
as the required pharmacovigilance activities continue to expand.
The Group has focused on its manufacturing requirements by
working with its contract manufacturer and raw material supplier to
meet commercial product supply in line with its timing expectations
and to pursue ongoing process improvement initiatives to support
future increases in supply. These initiatives are part of continuous
improvement and will form part of the Group’s expenditure base
moving forward. The contract manufacturer bears responsibility for
the manufacturing standards of the commercial drug product.
The US FDA approved SCENESSE® for the use in EPP during the
financial year. SCENESSE® was launched in the US in April 2020.
The Group is focussed on securing agreement on reimbursement
of SCENESSE® with insurers to make SCENESSE® available to all
US patients receptive to the treatment. The Group will continue
to expand its resources and activities to support US market entry
which includes operating a risk management plan similar to what
has been instituted in Europe.
The Group will continue its North American clinical program
to evaluate the effectiveness of its lead product to repigment
vitiliginous lesions (depigmented skin areas) in combination with
NB-UVB light therapy in patients with vitiligo. This program would
include advancing into the next phases of clinical studies to
demonstrate the efficacy and long-term safety of SCENESSE® in
combination with NB-UVB in the treatment of vitiligo.
The Group also intends to further progress its clinical program
with SCENESSE® in other indications, including yet to be disclosed
acute and critical disorders. To support this likely development,
CLINUVEL is advancing PRÉNUMBRA®, a non-solid dosage form
of afamelanotide as a potent haemodynamic, vasoactive and anti-
oncotic therapeutic agent, initially in adult patients.
The Group expects to advance its product pipeline, progressing
the development of the molecules CUV9900 and VLRX001
through the various development phases which may include
formulation development, non-clinical and human testing. In
addition, complementary OTC products are being developed
and manufactured for clinical use. The Group has increased its
resources and expanded its capabilities to progress these projects
underway at VALLAURIX.
35
REMUNERATION REPORT
The Remuneration Report, which forms part of the Directors’
Report, provides information about the remuneration of the
Directors of CLINUVEL PHARMACEUTICALS LTD and Other Key
Management Personnel for the year ended 30 June 2020.
Key Management Personnel (‘KMP’) has the meaning given in the
Australian Corporations Act and who together have the authority
and responsibility for planning, directing and controlling the
activities of the Group, being:
Name
Position
Term as KMP
Non-Executive Directors
Mr. S.R. McLiesh
Non-Executive Director
To 30 November 2019
Mrs. B.M. Shanahan
Non-Executive Director
Mr. W.A. Blijdorp
Non-Executive Director
Dr. K.A. Agersborg
Non-Executive Director
Full Year
Full Year
Full Year
Mrs. S. E. Smith
Non-Executive Director
From 24 September 2019
Prof. J. V. Rosenfeld
Non-Executive Director
From 26 November 2019
Executive KMP
Dr. P.J. Wolgen
Managing Director and
Chief Executive Officer
Dr. D.J. Wright
Chief Scientific Officer
Mr. D.M. Keamy
Chief Financial Officer and
Company Secretary
Full Year
Full Year
Full Year
The Remuneration Report is set out under the following main
headings:
A. Introduction by the Chair of the Remuneration Committee
B. Remuneration Governance
C. Executive Remuneration
D. Non-Executive Remuneration
E. Service Agreements 2019/20
F. Share Based Remuneration
G. Details of Remuneration
H. Additional Information – Remuneration
A. INTRODUCTION BY THE CHAIR OF THE
REMUNERATION COMMITTEE
the Chair of
Chairman of the Remuneration
Committee: Mr Willem Blijdorp
the Remuneration
As
Committee, I am pleased to present our
Board’ Remuneration Report for the year
ended 30 June 2020.
We have kept the format of this year’s
Remuneration Report consistent with last year’s since there have
not been any significant changes in internal policies or regulations.
I oversee the Group’s remuneration philosophy which aims to
attract, retain and motivate talented professionals we require for
the Company to meet its strategic objectives. In this process, we
wish to see professionals receive appropriate acknowledgement
and remuneration.
The Remuneration Committee oversees a remuneration policy of
the Group to ensure it is fair, competitive with international peers
and transparent. All in all, we strongly believe that a remuneration
policy well implemented should help us drive growth strategy and
sustainability of CLINUVEL, and thus far we have been proven right.
In 2020, CLINUVEL delivered another year of growth despite the
global pandemic and lockdowns affecting all EU countries and
the US. Whilst many peer companies have been posting losses
and have been required to raise capital, CLINUVEL’s Board
and shareholders were fortunate to have a prudent executive
management team who had foreseen and planned for the
economic downturn and maneuvered the Company through tough
times.
In the past year, we increased our revenues by 4%, our cash
reserves by 23% and expanded the distribution of SCENESSE®
across Europe. Standing tall and with some Dutch pride I look at
how CLINUVEL posted an NPAT of A$16.6M and PBIT of A$13.1M
in the middle of a global crisis and when many hospitals in Europe
and US were not seeing out-patients in the first half of 2020. Our
management skilfully came up with a plan to guarantee continuity
of treatment for these patients able to travel under the national
restrictions imposed by governments.
The Remuneration Committee with consensus of the full Board
designed a Performance Rights Plan, which had received
shareholder approval in November 2019 and which outlines step
by step the Performance Conditions which need to be met for the
Company to grow on all fronts within a vesting period of 4 years.
This progressive but realistic business plan is being implemented
and incentivizes executives and staff along the way. Assuming
these Performance Conditions are met the Company should have
grown significantly in value, providing commensurate returns for
shareholders.
As I had stated in relation to the Committee’s intentions in 2019,
this year we reformed the Executive Agreements by eliminating
cash-based Business Generating Incentives, and substituting
these by a Performance Rights Plan vesting over 4 years. This PRP
aims to incentivize and align the interests of the management team
with those of shareholders, and in a dual position as Chairman of
36
the Remuneration Committee and also as larger investor of the
Company I fully support this direction.
In building this Company, a careful financial and operational
approach is taken which is receiving much recognition from
the financial community I am in contact with and despite the
shortselling we have seen in CLINUVEL the past year. The cost of
issuing shares repetitively, the dilution caused to shareholders and
the distraction to a management has been successfully avoided,
and in terms of risk management we could not have asked for
more.
In 2020, we also implemented the decision which forms part of the
Company’s policy that non executive directors will not participate
in a Performance Rights Plan or Options Scheme since we wish to
retain the independence of the non-executive directors.
In recent weeks, the Remuneration Committee and Board has
been surprised, impressed but proud to learn that our CEO has
waived and rejected his STI awarded to him for achieving 70% of
the KPIs for 2020. His decision reflects an unusual and amazing
leadership in the industry, awareness of the world and extraordinary
sensitivities to ask the Remuneration Committee to reinvest these
monies for further growth of the Company. In my long career it is
rare to find executives who independently pass on their incentives
and financial awards for the greater benefit of the Company,
shareholders and patients: in Philippe we have long identified a
professional of different calibre.
Remuneration Report
policies of the Remuneration Committee need to change with the
times we are living in, and therefore a company and management
team needs to be innovative and behave in an entrepreneurial way.
For this to succeed, the Company needs to provide a working
environment for them to stay on and incentivize them for their
achievements.
In CLINUVEL, we have a CFO, CSO and CEO who have this mindset
and are not getting out of the boat half-way down the trip: their trip
is far from easy, but they have delivered and continue to perform
and have built a Company to survive all challenges. As Chairman of
the Remuneration Committee this is amazing, I am not sure I would
have the stamina to stay on this project for 2 decades.
My vision is simple, entrepreneurship is to implement new
combinations, create new business models and change when
the environment asks you to do this. With this mindset, this
management team is beating all challenges even in the face of
economic hard times.
I recommend the Remuneration Report 2020 to all our shareholders
and proxy representatives.
.
Willem Blijdorp, Chairman of the Remuneration Committee
Finally, to summarize in a more personal way, I see the current
performance of the Company as follows. The approach and
Amsterdam
B. REMUNERATION GOVERNANCE
(i) Remuneration Committee
The Board has provided a mandate to the Remuneration Committee
to assist and advise on determining appropriate remuneration
policies for its KMP over time, taking into account the relationship
between pay and performance, and the results of any evaluations
or review processes. The Board has also provided a mandate to
the Remuneration Committee to provide advice on non-executive
director fees and advice on setting salaries and fees, short- and
long-term incentives and employment terms and conditions for its
Key executives.
The objectives of the Remunerations Committee’s responsibilities
are to ensure that:
a) Remuneration of the Company’s KMP is aligned with the
interests of the Company and its shareholders within an
appropriate control
into account the
framework, taking
Company’s strategies and risks.
b) The level and composition of remuneration attracts, retains
and motivates people of high calibre and with unique specialist
industry knowledge to work towards the long-term growth and
success of the Company.
c) The role that total fixed remuneration and short- and long-
term incentives play is clearly defined and provides a clear
relationship between performance and remuneration.
d) The levels and structure of remuneration are benchmarked
relevant peers and considered against global
against
employment market conditions.
e) The Company gives due consideration to applicable legal
requirements and appropriate standards of governance.
The methods used by the Remuneration Committee to assess
Board performance is disclosed in the Corporate Governance
Protocol.
(ii) Remuneration Recommendations
Under the provisions of the Committee’s Charter, the Committee
may engage the assistance and advice from external remuneration
advisors. To ensure
recommendations made by
remuneration consultants are provided without undue influence
that any
being exerted by Executives, external remuneration consultants
deliver their advice directly to members of the Committee.
In the year ended 30 June 2020, the Remuneration Committee
engaged the services of remuneration advisors to assist with a
review of the remuneration framework, to benchmark executive
KMP salaries and to provide comparable peer company market
data. No remuneration recommendations as defined by the
Corporations Act was received from external consultants during
the financial year.
(iii) Voting and feedback at the Company’s last Annual
General Meeting
In the 2019 Annual General Meeting (AGM), the Company obtained
88.96% of the proxy votes (including votes at the Board’s discretion)
in favour of adopting the 2018/19 Remuneration Report, and this
resolution was carried in favour by poll with 87.69% of votes cast.
The Company did not receive any further specific feedback at the
AGM on its remuneration practices.
(iv) Historical voting at the Company’s Annual General
Meetings since 2006
Since 2006 the Company has obtained a historical average of 92%
of proxy votes received (including votes at the proxy’s discretion),
either carried by a show of hands prior to and including the 2014
AGM or by a poll result after the 2014 AGM, in favour of adopting
the Remuneration Reports presented.
C. EXECUTIVE REMUNERATION
(i) Executive Remuneration Framework
The Company’s reward framework has historically provided for a
mix of fixed pay and variable pay. The variable pay is structured to
incentivise:
1) Short-term
(generally cash payments
form of
performance-based incentives awarded at a fixed amount or
as a percentage of base salary).
the
in
2) Long-term (generally based upon the issue of performance
rights to acquire shares in the Company, and in relation to the
Managing Director and to the Chief Financial Officer, other
fixed amount cash incentives, including retention awards to
recognise ongoing commitment to the Company).
37
Remuneration Report
The following diagram links each of the executive remuneration components to the Company’s mission and strategy.
To translate scientific breakthroughs into commercial products, aiming to deliver
innovative medical solutions for complex products
To be creative, to be diligent and to be vigilant in our focus over the long term
The CLINUVEL Vision
World Leader in Melanocortins
Diversify and grow
Establish new markets
Delivered through the Corporate Strategy
Revenue Growth
Market Capitalisation Growth
Development and commercial progress, set business
targets are met
And Achieving Performance
Fixed Remuneration
Short-Term Incentives
Retention Award*
Long-Term Incentives
Is Linked to Total Executive Remuneration
* Managing Director and CFO only
(ii) Executive Remuneration Structure 2019-20
a. Fixed Remuneration
Fixed remuneration comprises base salary, superannuation and non-monetary benefits including health insurance, accommodation,
relocation, travel and statutory benefits
Base Salary and
Non-Monetary
Benefits
Base salary is set at a level to attract and retain talent with the requisite capabilities to deliver on CLINUVEL’s objectives, taking into account
seniority, qualifications, skill, experience, length of service, leadership, industry knowledge and level of strategic oversight.
Base salary is regularly tested for market competitiveness by reference to appropriate benchmarks sourced externally and comparing to
industry-relevant local and international peer companies.
Base salary may be adjusted each year for changes to CPI. Any adjustments above CPI are in response to individual performance or change
in job scope and reviewed and approved by the Remuneration Committee.
b. Variable Remuneration – Cash Based
Short-Term Incentives are annual payments to reward executives for achieving certain regulatory, development, commercial and operational
outcomes which are expected to contribute to increasing shareholder value.
The Managing Director’s performance targets are set at the start of each financial year by the Remuneration Committee and are assessed
at the end of the financial year. The other Executive performance targets are set at the start of each financial year by the Managing Director
and are recommended to the Remuneration Committee for their review and approval.
Short-Term
Incentive
Payment occurs in the year following the year of achievement.
The target opportunity for the Executives for 2019/20 are:
• Managing Director: $750,000 Singapore dollars
• Chief Financial Officer: 17% of Base Salary
• Chief Scientific Officer: 9% of Base Salary
38
Short-term incentive targets are a mix between financial and non-financial targets. All targets are set having regard to the achievements
and performance of the prior year, market conditions and internal forecasts.
For the Managing Director, the weighting for 2019/20 was 30% financial targets and 70% in individual performance targets. The Board
considers the specific performance-based targets to be commercially sensitive and are not provided in detail. The targets for 2019/20 were
connected to:
Short-Term
Incentive
(continued)
1. Material progress in regulatory filings and in establishing price agreements with final payors, with an emphasis on the US;
2. Profitability and cash preservation; and
3. Progress in products and formulations under research & development by the VALLAURIX subsidiary entity.
Remuneration Report
For the year ended 30 June 2020, the Remuneration Committee assessed the Managing Director’s performance targets which form his
Short-Term Incentive and awarded a 70% assessment against the targets. The Managing Director has autonomously chosen to forego
this year’s STI award and for it to be waived in solidarity with the millions of people who have been impacted and the lives lost due to
the coronavirus pandemic and for the monies to be re-invested in the Company’s further research and development. The remainder of
CLINUVEL’s staff and executives will receive their awards towards Key Performance Indicators for FY2020.
For the Other Executives, the Short-Term Incentive targets can be a mix of individual performance-based incentives and have a component
for time served to encourage staff retention. Each performance-based target is based on specific individual responsibilities and
objectives typical for these roles in a global life sciences company at its stage of development and commercialisation. The performance-
based incentives covered revenue generation, business expansion and optimisation, regulatory progress, manufacturing, research and
development and corporate affairs. The Managing Director assessed overall performance for the 2019/20 year against the Short-Term
Incentives and recommended to the Remuneration Committee and who approved the following assessments against the maximum Short-
Term Incentives:
• Chief Scientific Officer: 95%
• Chief Financial Officer: 89%
Business Generation Incentives (BGI) are individual longer-term cash incentive components based on specified performance-based targets
which remain for the term of an Executive’s service agreement.
BGIs are aimed to:
• reward exceptional business outcomes that contribute to creating significant corporate value without shareholder dilution through
equity remuneration; and
• to act as a key retention tool.
The Remuneration Committee reviews BGIs each time there is a renewal to a service agreement to ensure these incentives are linked to the
Company’s longer-term strategies it considers most likely to achieve the best possible outcomes for the Company and its shareholders.
Business
Generation
Incentive
Managing Director: Consequent to shareholder approval to grant performance rights to the Managing Director at the 2019 Annual General
Meeting, Business Generation Incentives were removed from the Managing Director’s service agreement.
Other Executives: Upon a change to the Chief Financial Officer’s service agreement from July 1 2019, BGI targets which form part of the
overall remuneration package were amended. These longer-term incentives are based on set performance targets which must be achieved
before 30 June 2022 and are linked to the Company achieving exceptional business outcomes that contribute to creating corporate value
and to act as a key retention tool.
The BGIs for the Chief Financial Officer vary between $30,000 and $60,000 per BGI, linked to:
• BGI1: successful regulatory outcome resulting in the first US approval for the use of SCENESSE®;
• BGI2: expansion of the Company through acquisition and integration of a new entity with demonstrated positive cash flows of the
acquired entity for four consecutive quarters post-acquisition; and
• BGI3: participation in an equity or debt funding event if deemed necessary to meet the business needs of the Company.
For the 2019/20 financial year, BGI1 was achieved by the Chief Financial Officer.
Longevity-based awards are remuneration payments to encourage key management retention and to recognise an ongoing commitment to
the Company.
In 2019/20 the Managing Director and Chief Financial Officer entered into new service agreements with the Company which included
longevity-based award payments as part of overall remuneration. The executives are entitled to receive the following payments for each full
month of service to CLINUVEL and its subsidiaries since employment start.
Retention Award
Managing Director: A$7,500
Chief Financial Officer: A$1,000
There is a risk of forfeiture of 100% of the longevity-based award for 12 months following the July 1 2019 Effective Date of the 2019/20
service agreement should the executives provide a notice of termination during this period. Once the forfeiture period lapses, the longevity-
based award shall be paid to the executives no less than 36 months following the Effective Date of the service agreement unless the service
agreement is terminated sooner.
39
Remuneration Report
Discretionary
Payment
Managing Director Only: only in the event of exceptional performance, innovation, expansion, acquisitions, manufacturing and business
development which do not form part of the STI or not otherwise anticipated at the time of execution of the service agreement.
No discretionary payment was awarded to the Managing Director for the year ended 30 June 2020 or 30 June 2019.
c. Variable Remuneration – Equity Based
Performance Rights, being an option to acquire ordinary shares of CLINUVEL PHARMACEUTICALS LTD for nil exercise price, are offered to
Executives from time to time to:
• retain and motivate the Other Executive KMP to drive the long-term growth and success of the Company
• align their interests with increased shareholder wealth over the longer term
Unlike other equity remuneration plans internationally, performance rights are not granted to Executives annually.
Historically, by virtue of the nature of the Company being primarily focussed on business expansion through ongoing research and
development, the Performance Conditions attached to Performance Rights have been based on on a mix of financial and commercial
objectives and non-financial operational targets strongly linked to shareholder value, such as enterprise value and revenue growth.
The Remuneration Committee assesses and recommends to the Board the quantum of performance rights amounts based on:
• length of time served prior to issue of performance rights;
• weighted average share price levels at time of issue;
• responsibility levels within the Group;
• current base pay including variable short-term incentive levels;
• industry trends;
• impact on share dilution; and
• nature of vesting (performance) conditions attached to the issue of performance rights.
Performance Rights have vesting periods either up to four years, seven years or undated in duration whereby if the performance conditions
are not met by the vesting date, the Performance Rights will lapse. Performance Rights will generally only vest if the Executive remains in
employment within the CLINUVEL Group of entities at the time of vesting.
The achievement of the Performance Condition is assessed and approved by the Board when it is considered satisfied or the condition has
otherwise been waived by the Board.
The Performance Rights are exercised into new Shares and are acquired by a Plan Trustee and then, from time to time, transferred to the
beneficiary, but generally only when the beneficiary ceases employment (or Directorship). The Company may determine and conclude
agreements with the Plan Trustee and enforce or prosecute any rights and obligations under such agreements, without reference or
recourse to a participant under the Plan.
For the financial years ended 30 June 2020 and 30 June 2019, no Performance Rights were granted to the Other Executive KMP. The
Other Executive KMP were last issued Performance Rights in the 2015/16 financial year.
The Performance Conditions attached to Performance Rights previously issued to Executives (and to non-executive Directors in previous
years) issued and unvested at any time during 2019/20 relate to long-term (multi-year) strategic, non-financial objectives and they were
chosen because they are considered to be significant for long term sustainability of the Group and longer-term value creating in nature.
These unvested Performance Conditions are:
A. Granting market approval for SCENESSE® by the US FDA (not attached to Non-Executive Directors) – achieved in 2019/20;
B. Securing sufficient funding to secure 5 performance conditions (including the performance condition ‘Granting market approval for
SCENESSE® by the US FDA’) (not attached to Non-Executive Directors) – achieved in 2019/20;
C. Announcement of commercial partnership to distribute SCENESSE® (or derivative of) (One Non-Executive Director, and Other
Executive KMP and staff only); and
D. The earlier of: (a) second molecule in new formulation, or (b) paediatric formulation for afamelanotide (Other Executive KMP and staff
only)
At the 2019 Annual General Meeting, shareholders approved the grant of 1,513,750 performance rights to the Managing Director and
these Performance Rights were issued on 26 August 2020. Prior to this, the Managing Director was last issued Performance Rights 5 years
previous, in the 2014/15 financial year.
By shareholders approving the issue of Performance Rights, the cash-based Business Generation Incentives included in the Managing
Director’s 2019 service agreement were replaced entirely by equity based remuneration to vest upon the Company meeting specific
performance conditions.
These Performance Rights have a vesting period of up to four years from date of grant. If the Performance Conditions are not achieved by
20 November 2023, they shall be forfeited and will lapse.
A summary of the performance conditions granted to the Managing Director in respect of the Performance Rights approved by shareholders
at the 2019 AGM are set out below:
Performance
Rights
40
Description of Performance Conditions
Executive management and staff succeeding in steering the Company to a:
i) Market capitalisation of a minimum A$1,600,000,000 - as measured by a minimum of 15 trading days during the vesting period
- 10% of the performance rights under PC1 shall vest,
ii) Market capitalisation of a minimum A$2,100,000,000 - as measured by a minimum of 15 trading days during the vesting period
- 15% of the performance rights under PC1 shall vest,
iii) Market capitalisation of a minimum A$2,700,000,000 - as measured by a minimum of 15 trading days during the vesting period
- 25% of the performance rights under PC1 shall vest,
iv) Market capitalisation of a minimum A$5,000,000,000 - as measured by a minimum of 15 trading days during the vesting period
- 25% of the performance rights under PC1 shall vest,
v) Market capitalisation of a minimum A$7,500,000,000 - as measured by a minimum of 15 trading days during the vesting period
- 25% of the performance rights under PC1 shall vest.
Remuneration Report
Performance
Rights
To achieve these targets within the vesting period, the Company must generate returns well above the performance of global biotech
indices over a similar period, such as the Nasdaq Biotech Index which performed 30.32% over 5 years (ending June 2019) and 5.54%
on an annualised basis over the same period.
PC1
450,000
Only in case of a recession in the country of the Company’s primary market exchange (recession defined by a contraction of gross
domestic product for 2 consecutive quarters) when the Company’s market capitalisation may be adversely impacted by conditions
outside management control, that the market capitalisation targets defined in PC1 (i) to (v) above will be replaced by the following
performance targets:
i) The Company’s growth in share price outperforms either the Nasdaq Biotech Index or ASX Healthcare Index for 1 quarter - after
the country has entered a recession - by more than 3.0%, 10% of the performance rights under PC1 shall vest,
ii) The Company’s growth in share price outperforms either the Nasdaq Biotech Index or ASX Healthcare Index for 1 quarter - after
the country has entered a recession - by more than 4.0%, 15% of the performance rights under PC1 shall vest,
iii) The Company’s growth in share price outperforms either the Nasdaq Biotech Index or ASX Healthcare Index for 1 quarter - after
the country has entered a recession - by more than 5.0%, 25% of the performance rights under PC1 shall vest,
iv) The Company’s growth in share price outperforms either the Nasdaq Biotech Index or ASX Healthcare Index for 1 quarter - after
the country has entered a recession - by more than 7.0%, 25% of the performance rights under PC1 shall vest,
v) The Company’s growth in share price outperforms either the Nasdaq Biotech Index or ASX Healthcare Index for 1 quarter - after
the country has entered a recession - by more than 9.0%, 25% of the performance rights under PC1 shall vest
i) Upon quarterly reporting of A$55 million in cash and cash equivalents held for 2 consecutive quarters, 15% of PC2 shall vest,
ii) Upon quarterly reporting of A$65 million in cash and cash equivalents held for 2 consecutive quarters, a further 20% of PC2
shall vest,
iii) Upon quarterly reporting of A$80 million in cash and cash equivalents held for 2 consecutive quarters, a further 30% of PC2
shall vest,
iv) Upon quarterly reporting of more than A$100million in cash and cash equivalents held for 2 consecutive quarters, a further 35%
of PC2 will be achieved.
Dividends paid out during the vesting period shall be added back to the calculation of the cash reserves. At any time during the vesting
period, the ratio between cash and cash equivalents internally generated from the Company’s operations and any debt and/or equity
financing which increases cash and cash equivalents must be at minimum 2:3 ratio for any of the 5 performance targets under PC2 to
be achieved.
Successful acquisition of a business entity, defined by:
i) The acquired entity must have generated sales revenue within 6 months of transaction, 50% of PC3 shall vest,
ii) CUV Group becomes or remains profitable within 3 years (plus variability of one year) of transaction as measured by two
successive quarters reporting profitability of the two or more combined entities, 50% of PC3 shall vest.
For PC3 to be achieved, the acquisition must be considered synergistic to the Company’s business operations at the time of
acquisition.
i) Upon receipt of first US revenues under the US post-marketing authorisation for SCENESSE®, 34% of PC4 shall vest,
ii) US revenues in year 3 to exceed revenues by a minimum of 10% in year 2, a further 33% of PC4 shall vest,
iii) US revenues greater than US$10,000,000 in a 12 month period leads to vesting of 33% of PC4.
i) Market launch of first non-pharmaceutical (‘OTC’) product(s) line developed by the VALLAURIX subsidiary entity, 15% of PC5
shall vest,
PC2
PC3
PC4
ii) Total revenues from OTC product lines developed by the VALLAURIX subsidiary entity achieving greater than A$250,000 in
PC5
accumulated gross sales, a further 30% of PC5 shall vest,
iii) First topical melanogenic formulation to be used either in animal or in human testing, a further 25% of PC5 shall vest,
iv) Upon the completion of the first clinical study of a SCENESSE® paediatric formulation (being the completion of a final clinical
study report), a further 30% of PC5 shall vest
i) Upon start (being the closure of recruitment period) of a Phase IIb vitiligo study in North America, 20% of PC6 shall vest,
ii) Upon disclosure to the securities exchange of the results to the Phase IIb vitiligo study in North America, 20% of PC6 shall vest,
iii) After the completion of the Phase IIb vitiligo study in North America and prior to the subsequent Phase IIb/III study, upon holding
a Type-C meeting (FDA) and acceptance of study protocol for the Phase IIb/III vitiligo study in North America, a further 20% of
PC6 shall vest,
iv) Upon start (being the closure of recruitment period) of the subsequent Phase IIb/III vitiligo study in North America, a further 20%
PC6
of PC6 shall vest,
v) Upon disclosure to the securities exchange of the results to the subsequent Phase IIb/III vitiligo study in North America, 20% of
PC6 shall vest.
105,000
105,000
87,500
175,000
262,500
41
Remuneration Report
i) Upon the regulatory submission to either of EMA, FDA, TGA, PMDA and Swissmedic to approve SCENESSE® or any other
molecule or product enhancing the pharmaceutical product line-only offerings of the Company, 25% of PC7 shall vest,
ii) Upon the regulatory approval by either of EMA, FDA, TGA, PMDA and Swissmedic of SCENESSE® or any other molecule
constituting a successful evaluation of a scientific dossier, a further 75% of PC7 shall vest.
The Board to use its discretion to award Performance Rights depending on the extraordinary nature of the corporate event(s) achieved
and the significant impact on Company's value. It is not certain that these Performance Rights will be issued during the fixed term of
the Conditional Rights Plan, and hence these need to be regarded as a reserve pool enabling the Company to grant in the event of
exceptional and unexpected performances which was unanticipated at the time of business planning.
PC7
PC8
212,500
116,250
These corporate events shall include, but are not limited to, business generation in new markets without the Company engaging in
merger and acquisition activity.
(iii) Managing Director Remuneration – Further
Information
The inherent risk of failure within pharmaceutical development
is high and this risk is magnified for the Company due to its
specialised and narrow focus on developing and commercialising
a novel, first-in-class and first-in-line therapies in diseases where
there is an unmet clinical need.
The current progress and success of the Company needs to be
set against the previous managerial attempts which had posed
operational, regulatory and financial challenges. To mitigate the risk
and to provide a strong platform to achieve meaningful progress,
the Board has followed a business model where most operational
skills are retained in-house, where possible, and most management
responsibilities are concentrated between the Managing Director
(acting in a dual capacity as Chief Executive Officer and Chief
Medical Officer) and the Chief Scientific Officer. The Managing
Director has the responsibility of guiding and overseeing the
execution of the overall corporate strategy, has global responsibility
for the safety aspects of the drug (including pharmacovigilance
and quality management) and is responsible for commercial drug
pricing and reimbursement negotiations. The Chief Scientific
Officer is responsible for pre-clinical programs, toxicology, the
manufacturing of the drug delivery program, clinical program
and setting the regulatory strategies in close coordination with
the Board of Directors. As the business evolves and progresses
through its development path, this centralised management model
will continue to evolve, and key management responsibilities will be
shared across new and existing senior management throughout
the Group.
The Managing Director’s remuneration structure is reviewed every
three years to ensure:
• A maximum level of incentivisation to lead and advance the
Company’s program from its current stages of development
and commercial growth to serve the long term interest of the
Company, taking into account the unique risk and complexity
within the business model; and
• It is competitive in international markets, industry and related
fields of expertise and providing for specific skillsets.
In the 2019/20 year the Managing Director’s service agreement
was renewed for a further three years, from 1 July 2019 to 30 June
2022. In determining the level and structure of the remuneration
agreed with the Managing Director, the Remuneration Committee
considered the following criteria:
• longevity of his 15 years of service as CEO compared against
local and international peers;
• track record, integrity and professional qualifications for the
position;
the objectives of
(iv) Executive Remuneration Benchmarking
One of
the Remuneration Committee’s
responsibilities is to ensure that the levels and structure of
remuneration are benchmarked against relevant peers and
considered against global employment market conditions.
CLINUVEL refers to a select group of publicly listed companies on
the ASX and on international securities exchanges for the purpose
of peer group analyses. The selection criteria for these companies
is broadly based on comparison of:
a) businesses of similar complexity and innovative nature,
b) businesses of similar scope and scale,
c) sectors requiring highly technical and specialised skills,
d) businesses of similar value, reflected in market capitalisation,
e) businesses who have demonstrated similar progress in
achieving business outcomes, and
f) businesses of similar risk profile.
CLINUVEL aims to provide competitive remuneration for the
Managing Director based on both
international
comparable positions in the relevant market(s). CLINUVEL is a
company operating globally with the bulk of its operations and
financial exposure
Its remuneration
falling outside Australia.
structure requires to be competitive to international benchmarks.
local and
During the year the Managing Director's remuneration was
benchmarked against 6 revenue-generating Australian-listed life
science companies with market capitalisation between $400
million and $2 billion, along with 11 profit-generating US-listed
pharmaceutical companies with market capitalisation between
US$200 million and US$10 billion. The current total remuneration
level of the Managing Director remains below the median level.
(v) Relationship Between Remuneration And
Performance
The Group has been solely dedicated to the research, development
and commercialisation of its unique and medically beneficial
technology. The remuneration and incentive framework, which has
been put in place by the Board, has ensured executive personnel
are focussed on both maximising short-term operating performance
and long-term strategic growth to promote shareholder value.
The focus on growth in shareholder value has been centred
on achievement of regulatory, development, commercial and
operational outcomes, where financial metrics are not necessarily
an appropriate measure of executive performance and is commonly
expected in other market segments. In recent years the Board
has recognised that both financial and non-financial performance
measures have been a key link to driving share price performance
and this has been reflected in various performance conditions
attached to the long-term equity incentives.
• the enterprise value created since first employment;
• the shareholder value created in the past three years leading
up to the renewal to the service agreement (from 1 July 2016
to 30 June 2019);
• capability to sustain the Company’s focus to maximise
The table below shows the progress made in moving through the
clinical pathway and into the commercialisation pathway, reflecting
the performance of executive management under the leadership
of the Managing Director. The table also links to share price
performance.
profitability following market access; and
• a demonstrated result to attain stability of the business and
management team over the long-term.
42
Regulatory, Clinical & Commercial Milestones
Ph II Vitiligo Study - Singapore
VALLAURIX PTE LTD – formulation & melanocortin development
Post-marketing authorisation commitments
First commercial sales in EU
Submission and subsequent approval for marketing authorisation by the US FDA
Application for marketing authorisation submitted with TGA
First commercial sales in US
Market capitalisation (A$ million)
Share Price High ($)
Share Price Low ($)
Closing Share Price ($)
Change in Share Price over 1 Year (%)
Change in Share Price over 3 Years (%)
Change in Share Price over 5 Years (%)
Dividend Paid (cents)
(vi) Executive Remuneration Pay Mix
The Board believes the remuneration mix aligns the Managing
Director and Other Executive KMP to shareholder interest. The
remuneration mix for 2019/20 is demonstrated as follows:
Remuneration Report
Year Ended 30 June
2016
2017
2018
2019
2020
203
5.00
2.50
4.32
57
139
162
-
333
9.19
4.10
6.98
62
311
328
-
527
13.52
5.91
11.01
58
288
508
-
1,649
39.85
9.43
33.68
206
680
1881
2.0
1,267
45.88
12.92
25.65
(24)
268
803
2.5
Position
Managing Director
Other Executives
100%
100%
Fixed Remuneration
STI Cash
LTI Cash1
56% of Base Salary
-
Between 9% and 17% of
Base Salary
Up to 43% of Base Salary
(CFO Only)
-
LTI Equity2
138% of Base Salary
1 Does not include Retention Award unearned as at 30 June 2020
2 Shown as total value of performance rights calculated under AASB2 divided by 4 years being the vesting period of the performance rights granted in the year
TSR (1 Jul 2017 to 30 Jun 2020)
TSR (1 Jul 2015 to 30 Jun 2020)
268%
215%
169%
133%
58%
54%
45%
43%
26%
(24%)
(24%)
(29%)
(29%)
(39%)
(45%)
1110%
584%
555%
Polynovo (AU)
BioLife (US)
Avita (AU)
CLINUVEL (AU)
Opthea (AU)
Nanosonics (AU)
Emergent (US)
Mesoblast (AU)
Starpharma (AU)
Akcea (US)
Corcept (US)
Amphastar (US)
Anika (US)
Perrigo (US)
Prestige (US)
Jazz (US)
Eagle (US)
Supernus (US)
54%
45%
40%
28%
14%
(13%)
(19%)
(37%)
(41%)
(69%)
2722%
1176%
805%
738%
608%
301%
180%
154%
Polynovo (AU)
Opthea (AU)
CLINUVEL (AU)
Anika (US)
Avita (AU)
Nanosonics (AU)
Corcept (US)
Emergent (US)
Starpharma (AU)
Akcea (US)
Supernus (US)
Amphastar (US)
BioLife (US)
Mesoblast (AU)
Prestige (US)
Jazz (US)
Eagle (US)
Perrigo (US)
A comparison of the 3-Year and 5-Year Total Shareholder Return (TSR) of life science peer companies (being a mix of medical device, pharmaceutical
product and diagnostic focussed companies) referred above in section (iv) with CLINUVEL’s TSR for the same period shows CLINUVEL is ranked fourth
and third respectively.
43
Remuneration Report
D. NON-EXECUTIVE REMUNERATION
The Board seeks an appropriate mix of skill, diversity, experience
and specific expertise to steward the Company’s success. The
Remuneration Committee recommends to the Board individual
Non-Executive Director fee levels to attract and retain those with
the aforementioned attributes, having regard to global employment
market conditions and consultation with specialist remuneration
consultants with experience in the healthcare and biotechnology
industries.
Non-Executive Director Fees
Non-Executive Director fees consist of base fees and committee
fees and are inclusive of superannuation and all other contributions.
There are no further retirement benefits. The fees are outlined in the
table below:
Annual Non-Executive Director fees (inclusive of
superannuation):
The Managing Director, in consultation with the Remuneration
Committee, oversees the service agreements entered into with
other Executive KMP, providing for base salary, incentives,
other benefits and participation, when eligible, in the CLINUVEL
Conditional Rights Plan.
On appointment to the Board, all Non-Executive Directors enter
into a service agreement with the Company in the form of a letter
of appointment. The letter summarises the Board’s policies, the
Director’s responsibilities and compensation for holding office. The
details of the service agreements to the Managing Director and
Executive KMP are:
Name
Duration of contract
Notice Period (from
Company)
Dr Philippe
Wolgen2
Dr Dennis
Wright
Mr Darren
Keamy3
3 years
No fixed term 3 years
12 months
3 months
12 months
Board
Fees
Audit
& Risk
Committee
Remuneration
Committee
Nomination
Committee
Notice Period (from Managing
Director)
12 months
-
-
Chair
Non-Executive
Director
110,000
65,000
-
-
-
-
Committee
Chair
Committee
Member
-
-
15,000
15,000
5,000
5,000
-
-
-
-
* The Chair of the Board is a member of all Committees but does not receive any additional
Committee fees in addition to the base fee.
Under the Company’s Constitution, the maximum aggregate
remuneration available for division among the Non-Executive
Directors is to be determined by the shareholders in a General
Meeting and was set at $700,000 at the 2019 AGM. This amount
(or some part of it) is to be divided among the Non-Executive
Directors as determined by the Board. The aggregate amount paid
to Non-Executive Directors for the year ended 30 June 2020 was
$387,417.
Non-Executive Director Long-Term Incentive – Equity
Compensation
The long-term equity remuneration was formerly provided to Non-
Executive Directors via the CLINUVEL Conditional Rights Plan and
the Performance Rights Plan. Any issue of performance rights to
Non-Executive Directors requires shareholder approval.
the
The Board had previously considered
relatively small
management team comparative to peer companies when setting
Non-Executive Director remuneration policy. The Board considered
that from time to time its Non-Executive Directors would become
involved in steering management and engage in certain operational
matters that would not commonly be expected of those in a
non-executive capacity. Furthermore, the Company ensured
the interests of all its KMP, including those in a non-executive
capacity, were aligned with the interests of the Company and its
shareholders within an appropriate control framework, addressing
the preference of some shareholders to see Non-Executive
Directors have shareholdings in the Group.
It is no longer planned for Non-Executive Directors to participate
in long-term equity compensation plans. Only one current Non-
Executive Director in Mrs Shanahan still holds Performance Rights,
the last date of issue being November 2014.
E. SERVICE AGREEMENTS 2019/20
Remuneration and other terms of employment for the Managing
Director is formalised by a service agreement determined by the
Remuneration Committee. The agreement provides for base salary,
short- and long-term incentives, other benefits and participation,
when eligible, in the CLINUVEL Performance Rights Plan.
44
Notice Period (from Executive
KMP)
-
3 months
12 months
Termination Payment without
Cause
Termination Payment with
Cause
2, 3 Expiry Date 30 June 2022
12 months
3 months
12 months
None
None
None
F. SHARE-BASED REMUNERATION
The Group has an ownership based scheme for Directors4, Other
Executive KMP, employees and select consultants of the Company
which is designed to provide long-term incentives to deliver long-
term value.
Performance Rights:
All Performance Rights that have been issued fall under two
Performance Rights plans:
a) the CLINUVEL Conditional Performance Rights Scheme
(2009); and
b) the CLINUVEL Performance Rights Plan (2014).
152,710 Performance Rights issued under the 2009 Scheme
remain unvested as at 30 June 2020 and there are no further
performance rights issued under the 2014 Plan remaining unvested
at 30 June 2020. 1,513,750 Performance rights were approved by
shareholders to grant to the Managing Director at the 2019 AGM
under the 2014 Plan. It is no longer intended to issue performance
rights under the 2009 Plan.
a) Conditional Performance Rights Scheme (2009)
The Conditional Performance Rights Scheme (2009) is available to
eligible employees of the Company. Any issue of rights to Directors
requires shareholder approval in accordance with ASX Listing
Rules. All rights convert to one ordinary share of the Group and
are issued for nil consideration, have no voting rights, are non-
transferable and are not listed on the ASX. These can be converted
to ordinary shares at any time once the vesting conditions attached
to the rights have been achieved, whereby these will be held in a
Scheme Trust on behalf of the eligible employee for up to seven
years.
The eligible employee can request for shares to be transferred
from the Scheme Trust after seven years or at an earlier date if
the eligible employee is no longer employed by the Company or
all transfer restrictions are satisfied or waived by the Board in its
discretion.
4 It is no longer planned for Non-Executive Directors to participate in
long-term equity compensation plans. Please refer to 'Non-Executive
Director Long-Term Incentive - Equity Compensation' in section D to this
Remuneration Report
b) Performance Rights Plan (2014)
The Performance Rights Plan (2014) is available to eligible
persons of the Company. Any issue of rights to Directors requires
shareholder approval in accordance with ASX Listing Rules. All
rights convert to one ordinary share of the Group and are issued
for nil consideration, have no voting rights, are not listed on the ASX
and are non-tradeable (other than with prior written Board consent).
They can be converted to ordinary shares at any time once the
vesting conditions attached to the rights have been achieved,
whereby, at the discretion of the Board, they will be held in a Plan
Trust on behalf of the eligible person.
The eligible person cannot trade the shares held by the Plan Trustee
without prior written Board consent until the earlier of seven years
from grant date of performance rights, when the eligible person
ceases employment or when all transfer restrictions are satisfied
Remuneration Report
or waived by the Board in its discretion. Unless the Performance
Rights are granted with a shorter vesting period, Performance
Rights under this plan lapses after seven years from grant date.
Performance rights are valued for financial reporting purposes
using either a Monte Carlo simulation pricing model or a binomial
valuation pricing model and are represented as accounting values
only in the financial statements. Holders of Performance Rights
may or may not receive a benefit from these amounts, either in the
current or future reporting periods. The value of all Performance
Rights granted, exercised and lapsed during the financial year is
detailed in the tables within the Remuneration Report.
G. DETAILS OF REMUNERATION
KMP REMUNERATION OF THE COMPANY FOR THE YEARS ENDED 30 JUNE 2020 AND 30 JUNE 2019
Post-employment
benefits
Gross
Salary 4
Short-Term
Incentive
Business
Generation
Incentive
Other¹
Super-
annuation/
Pension Fund
Total (Excluding
Share-Based
Payments)
$
1,577,235
893,660
41,857
100,457
73,059
73,059
99,167
80,000
67,917
65,000
52,667
-
38,204
-
257,105
252,064
278,713
265,441
2,485,924
$
-
422,747
-
-
-
-
-
-
-
-
-
-
-
-
17,355
18,149
42,364
32,384
59,719
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,000
-
152,299
30,373
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,000
152,299
1,729,681
473,280
-
30,373
$
-
-
3,976
9,543
6,941
6,941
-
-
-
-
-
-
3,629
-
21,003
20,531
21,003
20,531
56,552
57,546
$
1,729,534
1,346,780
45,833
110,000
80,000
80,000
99,167
80,000
67,917
65,000
52,667
-
41,833
-
295,463
290,744
372,080
318,356
2,784,494
2,290,880
Year
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Dr. P.J.
Wolgen³
Mr. S.R.
McLiesh
Mrs. B.M.
Shanahan
Mr. W.A.
Blijdorp
Dr. K.A.
Agersborg
Mrs. S. E.
Smith
Prof. J. V.
Rosenfeld
Other KMP
Dr. D.J.
Wright
Mr. D.M.
Keamy
Total
Share-based
payments
(accounting
charge only)²
Performance
Rights
$
1,645,205
68,346
-
2,520
-
2,520
-
-
-
-
-
-
-
-
1,284
5,608
4,174
18,141
1,650,663
97,135
Total (Including
Share-Based
Payments)
$
3,374,739
1,415,126
45,833
112,520
80,000
82,520
99,167
80,000
67,917
65,000
52,667
-
41,833
-
296,747
296,352
376,254
336,497
4,435,157
2,388,015
1 'Other’ includes health insurance, housing and other allowances that may be subject to fringe
benefits tax.
2 As these values represent accounting values the KMP may or may not actually receive any
benefit from these amounts, either in the current or future reporting periods. Any benefit
obtained by the KMP is contingent upon the Company achieving certain performance conditions.
The value of all Performance Rights and share options granted, exercised and lapsed during the
financial year is detailed in the following tables within the Remuneration Report. Performance
Rights were priced using either the Monte Carol simulation pricing model or a binomial pricing
model. The amount expensed each reporting period includes adjustments to the life-to-date
expense of the grants based on the reassessed estimate of achieving non-market performance
criteria.
3 In 2019/20 Dr Wolgen’s salary is paid in Singapore dollars (SGD) and in Euro currency.
4 Does not include movement in annual leave and long service leave provisions. Upon the
renewal of Dr Wolgen’s service agreement in 2019/20 and the increase to his base salary,
the value of his unused annual leave and long service leave entitlements were reset, resulting
in a $365,923 increase to annual leave and long service leave entitlements avaialble to Dr
Wolgen. The natural accretion to his annual leave and long service leave entitlements for
2019/20 was $172,950 (year ending 30 June 2019: $64,483). For Mr Keamy and Dr Wright,
the accretive movement to their annual leave and long service leave entitlements was $24,000
and $3,277 respectively (year ending 30 June 2019: $7,429 increase for Mr Keamy and
$11,603 decrease for Dr Wright)
45
Remuneration Report
THE RELATIVE PROPORTIONS OF REMUNERATION BETWEEN FIXED AND BASED ON PERFORMANCE FOR THE YEARS ENDED 30 JUNE
2020 & 30 JUNE 2019
Dr. P.J. Wolgen
Dr. D.J. Wright
Mr. D.M. Keamy
Fixed Remuneration
Performance Based
Fixed Remuneration
Performance Based
2020
2019
51%
94%
80%
49%
6%
20%
65%
92%
85%
35%
8%
15%
REMUNERATION PERFORMANCE RIGHTS HOLDINGS OF KMP – 2020
Balance at Start
of Year
Issued as
Compensation
Exercised
Lapsed and
Expired
Balance at End
of Year
Directors
Mr. S.R. McLiesh
Mrs. B.M. Shanahan
Dr. P.J. Wolgen
Mr. W.A. Blijdorp
Dr. K.A. Agersborg
Mrs. S. E. Smith
Prof. J. V. Rosenfeld
Other KMP
Dr. D.J. Wright
Mr. D.M. Keamy
40,000
25,000
208,332
-
-
-
-
50,625
98,440
-
-
-
-
-
-
-
-
-
-
-
(208,332)
-
-
-
-
(32,500)
(66,080)
(40,000)
-
-
-
-
-
-
-
-
-
25,000
-
-
-
-
-
18,125
32,360
Issued as
Compensation after
30 June 2020 *
-
-
1,513,750
-
-
-
-
-
-
All performance rights held at the end of the year are unvested.
* Relates to the approval by shareholders to grant performance rights to the Managing Director at the 2019 AGM.
SHARES HELD BY KMP
The number of ordinary shares in the Company during the 2019/20 reporting period held by each of the Group’s KMP, including their
related parties, is set out below:
Year Ended 30 June 2020
Personnel
Mr. S.R. McLiesh
Mrs. B.M. Shanahan
Dr. P.J. Wolgen
Mr. W.A. Blijdorp
Dr. K.A. Agersborg
Mrs. S. E. Smith
Prof. J. V. Rosenfeld
Other KMP
Dr. D.J. Wright
Mr. D.M. Keamy
Balance at Start of
Year
Granted as
Remuneration
Received on Exercise
Other Changes
Held at the End of
Reporting Period
187,774
258,969
3,296,364
1,743,118
4,100
-
-
314,374
306,720
-
-
-
-
-
-
-
-
-
-
-
208,332
-
-
-
--
32,500
66,080
-
-
-
-
1,400
-
1,693
(45,000)
(41,457)
187,774
258,969
3,504,696
1,743,118
5,500
-
1,693
301,874
331,343
TERMS AND CONDITIONS OF EACH GRANT OF RIGHTS AFFECTING REMUNERATION IN THE CURRENT OR FUTURE REPORTING PERIODS
Entity
Number of Rights
Value per Right on
Grant Date
CLINUVEL
CLINUVEL
CLINUVEL
91,667
116,667
105,875
$1.04
$1.04
$2.16
Class
Grant Date
Ordinary
Ordinary
Ordinary
25/11/2010
25/11/2010
17/03/2015
Vesting Date
for Retention in
Scheme Trust
09/10/2019
09/10/2019
09/10/2019
Lapsing Date
-
-
-
46
H. ADDITIONAL INFORMATION – REMUNERATION
For each cash incentive and right granted, the percentage of the available grant or cash incentive that was paid or vested in the financial
year, and the percentage forfeited due to unmet milestones (including service length), is set out below. Cash incentives are paid in the year
following the period of performance.
Remuneration Report
REMUNERATION DETAILS OF EQUITY INCENTIVES (PERFORMANCE RIGHTS)
Equity Incentives (Performance Rights)
Name
Mr. S.R. McLiesh
Dr. P.J. Wolgen
Mrs. B.M. Shanahan
Mr. W.A. Blijdorp
Dr. K.A. Agersborg
Mrs. S. E. Smith
Prof. J. V. Rosenfeld
Other KMP
Dr. D.J. Wright
Mr. D.M. Keamy
Year Granted
Latest Year of
Vesting
Vested in Year
Forfeited in Year
Max Value of Right
at Grant Date Yet
to Vest
2011/12
2010/11
2019/20*
2011/12
-
-
-
-
2011/12
2014/15
2011/12
2014/15
no limitation
no limitation
2023/24
no limitation
-
-
-
-
no limitation
2021/22
no limitation
2021/22
-
100%
0%
-
-
-
-
-
55%
100%
51%
100%
100%
-
0%
-
-
-
-
-
-
-
-
-
-
-
8,226,311
16,682
-
-
-
-
12,853
-
23,126
-
The maximum value of outstanding Performance Rights is unable to be estimated. On exercise, each Performance Right entitles the KMP to one fully paid ordinary share in the Company. The
share price of the Company at the time of exercise is not known. The minimum value of unvested performance rights is nil. The exercise price for those rights granted between 2010/11 and
2014/15 was $Nil.
* At the 2019 Annual General Meeting, shareholders approved the grant of 1,513,750 performance rights to the Managing Director and these performance rights were issued on 26 August
2020.
REMUNERATION DETAILS OF CASH INCENTIVES
Name
Dr. P.J. Wolgen
Dr. D.J. Wright
Mr. D.M. Keamy
Max Potential Opportunity
(%)
100%
9%
17%
STI Awarded (%)
STI Forfeited (%)
Total Granted ($)
0%
95%
89%
100%
5%
11%
-
21,982
42,634
LOANS TO DIRECTORS AND EXECUTIVES
No loans were granted to Directors or executives for the years ended 30 June 2020 and 30 June 2019.
END OF AUDITED REMUNERATION REPORT
47
Remuneration Report
SHARES PROVIDED UPON EXERCISE OF RIGHTS
DETAILS OF SHARES ISSUED DURING THE FINANCIAL YEAR AS A RESULT OF EXERCISE OF RIGHTS
Entity
Number of shares issued¹
Issue Price for Shares
CLINUVEL PHARMACEUTICALS LTD
449,705
Nil$
Class
Ordinary
¹These shares were issued by the Group during the year after performance conditions attached to the rights were considered met. Those shares issued by the Group to Directors and Employees
are held for retention by the Trustee for the 2009 Scheme and the 2014 Plan Trust. Shares issued by the Group to eligible participants were issued directly to the Trustee.
DETAILS OF SHARES TRANSFERRED DURING THE YEAR TO EMPLOYEES FROM THE 2009 SCHEME TRUST AND THE 2014 PLAN TRUST
Entity
Number of shares issued¹
Issue Price for Shares
CLINUVEL PHARMACEUTICALS LTD
359,938
Nil$
Class
Ordinary
¹These shares were issued by the Trustee to the 2009 Scheme and the 2014 Plan to departing employees who resigned from the Group during the year or to existing employees who had their
transfer restrictions waived by the Board in their discretion.
UNISSUED SHARES UNDER OPTION
Entity
Number of Shares
under Rights
Exercise Price
Class
Expiry Date
CLINUVEL PHARMACEUTICALS LTD
152,710
Issued after the reporting date, but granted during the year
CLINUVEL PHARMACEUTICALS LTD
1,513,750
152,710
$Nil
-
$Nil
Ordinary
-
Upon achievement of specific performance and time-
based milestones or upon cessation of employment
-
Ordinary
20 November 2023
NON-AUDIT SERVICES
For the year ended 30 June 2020, Grant Thornton Australia
provided audit services to the Company. Grant Thornton Australia
also provided non-audit services, specifically tax related services.
Details of amounts paid or payable to the auditor for non-audit
services provided during the year by the auditor are outlined in
Note 19 to the financial statements.
The Directors are satisfied that the provision of non-audit
services, during the year by the auditor is compatible with the
general standard of independence for auditors imposed by the
Corporations Act 2001. The Directors are of the opinion that the
services as disclosed in Note 19 to the financial statements do not
compromise the external auditor’s independence, based on advice
received from the Audit Committee, for the following reasons:
• all non-audit services have been reviewed and approved to
ensure that they do not impact the integrity and objectivity of
the auditor; and
• none of the services undermine the general principles relating
to auditor independence as set out in APES 110 ‘Code of
Ethics for Professional Accountants’ issued by the Accounting
Professional & Ethical Standards Board, including reviewing
or auditing the auditor’s own work, acting in a management
or decision-making capacity for the Company, acting as
advocate for the Company or jointly sharing economic risks
and rewards.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration as required by s.307C
of the Corporations Act 2001 is included and forms part of this
Directors’ Report.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on
behalf of the Company or intervene in any proceedings to which
the Company is party for the purpose of taking responsibility on
behalf of the Company for all or any part of those proceedings.
The Company was not party to any such proceedings during the
year.
Signed in accordance with a resolution of the Board of Directors
pursuant to s.298(2) of The Corporations Act 2001.
Dr. Philippe Wolgen, MBA MD
Director
Dated this 26th day of August, 2020
48
STATEMENT OF PROFIT AND OTHER
COMPREHENSIVE INCOME FOR
THE YEAR ENDED 30 JUNE 2020
Total revenues
Interest income
Other income
Total expenses
Profit before income tax benefit
Income tax benefit
Profit after income tax benefit
Net profit for the year
Other comprehensive income
Items that may be re-classified subsequently to profit or loss
Exchange differences of foreign exchange translation of foreign operations
Other comprehensive income/(loss) for the period, net of income tax
Total comprehensive income/(loss) for the period
Basic earnings per share - cents per share
Diluted earnings per share - cents per share
The accompanying notes form part of these financial statements.
Note
2(a)
2(b)
2(c)
2(d)
3(a)
2020
$
32,565,423
562,928
781,319
(20,773,199)
13,136,471
3,510,388
16,646,859
16,646,859
Consolidated Entity
2019
$
31,047,776
564,657
886,037
(14,383,643)
18,114,827
19,333
18,134,160
18,134,160
592,857
592,857
(80,077)
(80,077)
17,239,716
18,054,083
16
16
33.8
33.0
37.6
36.6
49
STATEMENT OF FINANCIAL
POSITION AS AT 30 JUNE 2020
Note
17(a)
4
5
6
7
8
9
3(c)
11
8
12
8
12
13
14
2020
$
66,746,521
6,612,684
1,287,914
508,818
75,155,937
1,075,441
1,313,937
185,030
3,811,500
6,385,908
81,541,845
4,771,581
212,331
1,676,435
6,660,347
1,107,224
105,727
1,212,951
7,873,298
73,668,547
151,849,375
1,856,458
(80,037,286)
73,668,547
Consolidated Entity
2019
$
54,268,758
4,156,216
2,136,084
591,516
61,152,574
337,851
368,805
185,030
301,112
1,192,798
62,345,372
3,633,281
261,251
1,065,510
4,960,042
171,267
34,210
205,477
5,165,519
57,179,853
151,314,175
1,352,416
(95,486,738)
57,179,853
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total current assets
Non-current assets
Property, plant and equipment - net
Right-Of-Use assets - net
Intangible assets - net
Deferred tax assets - net
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilties
Provisions
Total current liabilities
Non-current liabilities
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
The accompanying notes form part of these financial statements.
50
STATEMENT OF CASH FLOWS FOR
THE YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
GST and VAT refunds
Government grant
Net cash provided by operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Dividends paid
Repayments of lease liabilities
Repayments of interest
Net cash used in financing activities
Net increase in cash held
Cash and cash equivalents at beginning of the year
Effects of exchange rate changes on foreign currency held
Cash and cash equivalents at end of the year
The accompanying notes form part of these financial statements.
17(a)
Note
2020
$
29,287,833
(16,281,001)
636,631
423,370
121,535
Consolidated Entity
2019
$
32,221,122
(14,241,210)
440,919
35,276
-
17(b)
14,188,368
18,456,107
(888,826)
(888,826)
(1,224,021)
(243,341)
(18,501)
(1,485,863)
11,813,679
54,268,758
664,084
66,746,521
(257,616)
(257,616)
(957,160)
(69,627)
(3,879)
(1,030,666)
17,167,825
36,198,451
902,482
54,268,758
51
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Balance at 30 June 2018
148,614,908
2,863,901
618,015
(112,680,836)
39,415,988
Share Capital
Performance
Rights Reserve
Foreign
Currency
Translation
Reserve
Retained
Earnings
Total Equity
$
$
$
$
$
Exercise of performance rights under share-based payment
2,332,062
(2,332,062)
Employee share-based payment options
-
122,485
Purchase of shares held in subsidiary from non-controlling interest
367,205
-
-
-
-
-
17,098
-
-
139,583
367,205
(957,160)
(957,160)
151,314,175
654,324
618,015
(113,620,898)
38,965,616
18,134,160
18,134,160
Dividends paid
Transactions with owners
Profit for the year
Other comprehensive income:
Exchange differences of foreign exchange translation of foreign
operations
Total other comprehensive income
Balance at 30 June 2019
-
-
-
-
80,077
80,077
80,077
-
80,077
151,314,175
654,324
698,092
(95,486,738)
57,179,853
Exercise of performance rights under share-based payment
535,200
Employee share-based payment options
Issue Share Capital Purchase of shares of non-controlling interest
from minority owners via issue of Share Capital
-
-
(535,200)
1,632,099
-
-
-
-
-
-
26,614
1,658,713
-
-
(1,224,021)
(1,224,021)
151,849,375
1,751,223
698,092
(96,684,145)
57,614,545
16,646,859
16,646,859
Dividends paid
Transactions with owners
Profit for the year
Other comprehensive income:
Exchange differences of foreign exchange translation of foreign
operations
Total other comprehensive income
Balance at 30 June 2020
-
-
-
-
(592,857)
(592,857)
(592,857)
-
(592,857)
151,849,375
1,751,223
105,235
(80,037,286)
73,668,547
52
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2020
1. BASIS OF PREPARATION
The financial report is a general purpose financial report that
has been prepared in accordance with Australian Accounting
Standards, other authoritative pronouncements of the Australian
Accounting Standards Board and the Corporations Act 2001.
Compliance with Australian Accounting Standards ensures the
consolidated financial statements and notes of the consolidated
entity with International Financial Reporting Standards (‘IFRS’).
CLINUVEL PHARMACEUTICALS LTD is a for-profit entity for the
purposes of reporting under Australian Accounting Standards.
The financial report has been prepared on an accruals basis and is
based on historical costs and does not take into account changing
money values or, except where stated, current valuations of
financial assets. Cost is based on the fair values of the consideration
given in exchange for assets. The accounting policies have been
consistently applied, unless otherwise stated.
Both the functional and presentation currency of the Group
and its Australian controlled entities is Australian dollars. The
functional currency of certain non-Australian controlled entities is
not Australian dollars. As a result, the results of these entities are
translated to Australian dollars for presentation in the CLINUVEL
PHARMACEUTICALS LTD financial report.
In applying Australian Accounting Standards management must
make judgments regarding carrying values of assets and liabilities
that are not readily apparent from other sources. Assumptions and
estimates are based on historical experience and any other factor
that are believed reasonable in light of the relevant circumstances.
These estimates are reviewed on an ongoing basis and revised in
those periods to which the revision directly affects.
All accounting policies are chosen to ensure the resulting financial
information satisfies the concepts of relevance and reliability.
a) Principles Of Consolidation
The consolidated financial statements are prepared by combining
the financial statements of all the entities that comprise the
consolidated entity, being the Company (the parent entity) and
its subsidiaries as defined in Accounting Standard AASB 10
Consolidated Financial Statements. Consistent accounting
policies are employed in the preparation and presentation of the
consolidated financial statements.
b) Going Concern
The financial statements of the consolidated entity have been
prepared on a going concern basis. The consolidated entity’s
operations are subject to major risks due primarily to the nature
of research, development and the commercialisation to be
undertaken. The risk factors set out may materially impact the
financial performance and position of the consolidated entity.
The going concern basis assumes that, if required, future capital
raisings will be available to enable the consolidated entity to
acquire new entities with projects of interest and to undertake
the research, development and commercialisation of existing
projects and that the subsequent commercialisation of products
will be successful. The financial statements take no account
of the consequences, if any, of the inability of the consolidated
entity to obtain adequate funding or of the effects of unsuccessful
research, development and commercialisation of the consolidated
entity projects. The consolidated entity has successfully raised
additional working capital in past years. Should cash flows from
its commercialisation activities not provide adequate funding to
finance potential acquisitions or sustain its research, development
and commercialisation projects in the coming financial year, the
Directors would consider the need to bring in additional funds from
various funding sources.
In March 2020, the World Health Organisation declared the
outbreak of a novel coronavirus (COVID-19) as a pandemic, which
continues to spread worldwide. The spread of COVID-19 has
caused significant volatility in Australian and international markets.
There is significant uncertainty around the breadth and duration of
business disruptions related to COVID-19, as well as its impact on
the Australian and international economies. The length or severity
of this pandemic cannot be reasonably estimated. The Company
does not consider the impact of COVID-19 produced a material
adverse impact on its consolidated financial position, consolidated
results of operations, and consolidated cash flows in the financial
year 2020.
The Company has sufficient amounts of cash to be able to continue
as a going concern and therefore will be able to realise its assets
and extinguish its liabilities in the normal course of business and at
the amounts stated in the financial statements.
c) Income Tax
The consolidated financial statements include the information and
results of each subsidiary from the date on which the Company
obtains control and until such time as the Company ceases
to control such entity. In preparing the consolidated financial
statements, all intercompany balances and transactions, and
unrealised profits arising within the consolidated entity are
eliminated in full.
Current Tax
Current tax is calculated by reference to the amount of income tax
payable or recoverable in respect of the taxable profit or loss for the
period. It is calculated using tax rates and tax laws that have been
enacted or substantially enacted by reporting date. Current tax for
current and prior periods is recognised as a liability (or asset) to the
extent it is unpaid (or refundable).
Non-controlling interests, presented as part of equity, represent the
portion of a subsidiary’s profit or loss and net assets that is not held
by the Group. The Group attributes total comprehensive income or
loss of subsidiaries between the owners of the parent and the non-
controlling interests based on their respective ownership interests.
All the Group’s subsidiaries are wholly-owned and there are no
longer non-controlling interests with ownership interests in any of
the Group’s subsidiaries.
Deferred Tax
Deferred tax is accounted for using the comprehensive balance
sheet liability method in respect of temporary differences arising
from differences between the carrying amount of assets and
liabilities in the financial statements and corresponding tax base of
those items.
In principle, deferred tax liabilities are recognised on all taxable
differences. Deferred tax assets are recognised for deductible
temporary differences and unused tax losses to the extent that it
53
Notes to the Financial Statements
is probable that sufficient unused tax losses and tax offsets can
be utilised by future taxable profits. However, deferred tax assets
and liabilities are not recognised if the temporary differences
given rise to them arise from the initial recognition of assets and
liabilities (other than as a result of a business combination) which
affect neither taxable income nor accounting profit. Furthermore,
a deferred tax liability is not recognised in relation to taxable
temporary differences arising from goodwill.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except where the
consolidated entity is able to control the reversal of the temporary
differences and it is probable that the temporary differences will
not reverse in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with these
investments and interests are only recognised to the extent that it
is probable that there will be sufficient taxable profits against which
to utilise the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that
are expected to apply to the period(s) when the asset and liability
giving rise to them are realised or settled, based on tax rates
(and tax laws) that have been enacted or substantially enacted
by reporting date. The measurement of deferred tax liabilities and
assets reflects the tax consequences that would follow from the
manner in which the consolidated entity expects, at the reporting
date, to recover or settle the carrying amount of its assets and
liabilities.
Deferred tax assets and liabilities are offset when they relate
to income taxes levied by the same taxation authority and the
Company/consolidated entity intends to settle its current tax assets
and liabilities on a net basis.
settlement of all or part of the purchase consideration is deferred,
cost is determined by discounting the amounts payable in the
future to their present value as at the date of acquisition.
Depreciation is calculated on diminishing value so as to write
off the net cost of each asset over its expected useful life to its
estimated residual value. The estimated useful lives, residual values
and depreciation method are reviewed at the end of each annual
reporting period and adjusted if appropriate. An asset’s carrying
amount is written off immediately to its recoverable amount if the
assets carrying amount is greater than its estimated recoverable
amount.
The following diminishing value percentages are used in the
calculation of depreciation:
• Computers and software: 40%
• Leasehold improvement: 40%
• All other assets: 7.5% to 33.3%
Gains and losses on disposal of assets are determined by
comparing proceeds upon disposal with the asset’s carrying
amount. These are included in the Profit or Loss.
f) Investments And Other Financial Assets
Recognition and derecognition
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the
financial instrument and are measured initially at fair value adjusted
by transactions costs, except for those carried at fair value through
profit or loss, which are measured initially at fair value. Subsequent
measurement of financial assets and financial liabilities are
described below.
Tax Consolidation
The Company and its wholly-owned Australian entities are part
of a tax-consolidation group under Australian Taxation law.
CLINUVEL PHARMACEUTICALS LTD is the head entity of the tax-
consolidation group.
Financial assets are derecognised when the contractual rights to
the cash flows from the financial asset expire, or when the financial
asset and substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished,
discharged, cancelled or expires.
Current And Deferred Tax For The Period
Current and deferred tax is recognised as an expense or income
in the Statement of Profit or Loss and Other Comprehensive
Income, except when it relates to items credited or debited
directly to equity, in which case the deferred tax is also recognised
directly in equity, or where it arises from the initial accounting for a
business combination, in which case it is taken into account in the
determination of goodwill or discount on acquisition.
The deferred tax asset has been recognised as at 30 June 2020
and 30 June 2019 after management judgement was applied to
assess whether its unused tax losses and tax offsets could be
utilised by future taxable profits. It was determined:
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant
financing component and are measured at the transaction price in
accordance with AASB 15, all financial assets are initially measured
at fair value adjusted for transaction costs (where applicable).
Subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets,
other than those designated and effective as hedging instruments,
are classified into the following categories upon initial recognition:
• financial assets at amortised cost;
• financial assets at fair value through profit or loss (FVPL);
• debt instruments at fair value through other comprehensive
• The consolidated entity has experienced consecutive years of
income (FVOCI); and
profitability and revenue growth;
• equity instruments at FVOCI.
• Current pricing agreements with European payors are not
expected to change in the next financial year;
Classifications are determined by both:
• An increase to consolidated entity revenues are expected in
the near term from making SCENESSE® available in the USA;
• Whilst internal targets continue to expect ongoing profitability
in the near term, there is uncertainty around expected future
taxable income in the longer term as part of the business
strategy to expand the Company.
d) Cash And Cash Equivalents
Cash and cash equivalents comprise of cash on hand, at call
deposits with banks or financial institutions, bank bills and
investments in money market instruments where it is easily
convertible to a known amount of cash and subject to an
insignificant risk of change in value.
e) Property, Plant And Equipment
Plant and equipment are stated at cost less accumulated
depreciation and impairment. Cost includes expenditure that is
directly attributable to the acquisition of the item. In the event that
54
• The entity’s business model for managing the financial asset;
and
• The contractual cash flow characteristics of the financial
assets.
All income and expenses relating to financial assets that are
recognised in profit or loss are presented within finance costs,
finance income or other financial items, except for impairment of
trade receivables which is presented within other expenses.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet
the following conditions (and are not designated as FVPL):
• they are held within a business model whose objective is to
hold the financial assets and collect its contractual cash flows;
and
• the contractual terms of the financial assets give rise to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
After initial recognition, these are measured at amortised cost
using the effective interest method. Discounting is omitted where
the effect of discounting is immaterial. The Group’s cash and cash
equivalents, trade and most other receivables fall into this category
of financial instruments
Impairment of financial assets
Trade and other receivables
The Group makes use of a simplified approach in accounting for
trade and other receivables and records the loss allowance at
the amount equal to the expected lifetime credit losses. In using
this practical expedient, the Group uses its historical experience,
external indicators and forward-looking information to calculate the
expected credit losses using a provision matrix.
The Group assess impairment of trade receivables on a collective
basis as they possess credit risk characteristics based on the days
past due.
Classification and measurement of financial liabilities
The Group’s financial liabilities include trade and other payables.
Financial liabilities are initially measured at fair value, and, where
applicable, adjusted for transaction costs unless the Group
designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised
cost using the effective interest method except for derivatives
and financial liabilities designated at FVPL, which are carried
subsequently at fair value with gains or losses recognised in
profit or loss (other than derivative financial instruments that are
designated and effective as hedging instruments).
Notes to the Financial Statements
i) Intangible Assets – Trademarks and Patents
Trademarks and patents have a finite useful life and are recorded
at cost less accumulated amortisation and impairment losses.
Amortisation is charged on a straight-line basis over the shorter of
the relevant agreement or useful life. The trademarks and patents
had been fully amortised.
j) Payables
Trade payables and other accounts payable are recognised when
the consolidated entity becomes obliged to make future payments
resulting from the purchase of goods and services, incurred prior
to the end of the financial year.
k) Employee Benefits
Provision is made for benefits accruing to employees in respect of
wages and salaries, annual leave and long service leave when it is
probable that settlement will be required and they are capable of
being measured reliably.
Provisions made in respect of employee benefits expected to be
settled within 12 months, are measured at their nominal values
using the remuneration rate expected to apply at the time of
settlement.
Provisions made in respect of employee benefits which are not
expected to be settled within 12 months are measured as the
present value of the estimated future cash outflows to be made
by the consolidated entity in respect of services provided by
employees up to reporting date. The discount rate used to estimate
future cash flows is per the Australian high quality corporate bond
rates as commissioned by the Group of 100 and published by
Milliman Australia at reporting date.
All interest-related charges and, if applicable, changes in an
instrument’s fair value that are reported in profit or loss are included
within finance costs or finance income.
l) Revenue And Other Income
Revenue arises from the sale of SCENESSE® implants.
g) Inventories
Raw materials, work in progress and finished goods are stated
at the lower of cost or net realisable value. Cost comprises direct
material and labour. Costs are assigned to individual items of
inventory on the basis of weighted average costs. Net realisable
value is the estimated selling price in the ordinary course of
business less the estimated costs of completion and the estimated
costs necessary to make the sale.
h) Research And Development Expenditure
Expenditure on research activities is recognised as an expense in
the period in which it is incurred. Where no internally-generated
intangible asset can be recognised, development expenditure is
recognised as an expense in the period as incurred. An intangible
asset arising from development (or from the development phase of
an internal project) is recognised if, and only if, all of the following is
demonstrated:
• the technical feasibility of completing the intangible asset so
that it will be available for use or sale;
• the intention to complete the intangible asset and use or sell it;
• the ability to use or sell the intangible asset;
• how the
intangible asset will generate probable
future
The Group’s revenue from contracts with customers arises from the
commercial sales of goods and sales reimbursements. Commercial
sales of goods are the commercial sales of SCENESSE® implants
in Europe and the USA. Sales reimbursements are the distribution
of SCENESSE® under special access reimbursement schemes.
To determine whether to recognise revenue, the Group follows a
5-step process:
1) Identifying the contract with a customer
2) Identifying the performance obligations
3) Determining the transaction price
4) Allocating the transaction price to the performance obligations
5) Recognising revenue when/as performance obligation(s) are
satisfied.
Based on the above revenue recognition process and the nature
of all revenue streams from contracts with customers, the
Group recognises revenues as earned from commercial sales of
goods and sales reimbursements as earned when performance
obligations are satisfied at a point in time, which is when control of
the product passes to the customer, or generally upon receipt of
shipment.
economic benefits;
• the availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible asset; and
• the ability to measure reliably the expenditure attributable to
the intangible asset during its development.
Seasonal nature of revenue from contracts with suppliers
Due to patients seeking treatment
in the spring, summer
and autumn months, there remains a seasonal demand for
SCENESSE®. As such, fluctuations caused by seasonal demand
impact the Group’s operations.
The consolidated entity uses its critical judgment in continually
assessing whether development expenditures meet the recognition
criteria of an intangible asset.
Note “Revenue” provides additional disclosures disaggregating
revenue by geographical market and the timing of revenue
recognition.
Whilst at the end of the financial year the consolidated entity had
received European regulatory approval and launched a European
product the above criteria have not been fully satisfied to support
the recognition and generation of an internally generated intangible
asset.
Interest
Interest income is recognised on a proportional basis that takes
into account the effective yield on the financial asset.
55
Notes to the Financial Statements
Government R&D tax incentive
Other income from the Australian government R&D tax incentive
program is recognised when it has been established that the
conditions of the tax incentive have been met and that the expected
amount of tax incentive can be reliably measured. The Group’s
R&D tax incentive program is currently derived from expenditure
only. There was no other income from the government R&D tax
incentive for the year ended 30 June 2020.
Government Grant
Government grants represents the Job Support Scheme, Property
Tax Rebate and the Boosting Cash Flow for Employer schemes
from Australian and Singaporean governments in response to
ongoing novel coronavirus (COVID-19) pandemic. Government
grants are recognised in the financial statements at their fair values
when there is a reasonable assurance that the Consolidated
Entity will comply with the requirements and that the grant will be
received.
m) Share Capital
Ordinary share capital is recognised at the fair value of the
consideration received by the Company.
Any transaction costs arising on the issue of ordinary shares are
recognised directly in equity as a reduction of the shares proceeds
received.
n) Earnings Per Share
Basic Earnings Per Share
Basic earnings per share is determined by dividing net profit after
income tax attributable to members of the Company, excluding
any costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary shares
issued during the year.
Diluted Earnings Per Share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares
o) Goods And Services Tax/Value Added Tax (GST)
Revenues, expenses and assets are recognised net of the amount
of ‘goods and services tax’ or ‘valued added tax ‘as it is known in
certain jurisdictions (GST), except:
• where the amount of GST incurred is not recoverable from
the taxation authority, it is recognised as part of the costs of
acquisition of an asset or as part of an item of expense; or
• for receivables and payables which are recognised inclusive of
GST.
The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or payables.
Cash flows are included in the Statement of Cash Flow on a gross
basis. The GST component of cash flows arising from investing and
financing activities which is recoverable from, or payable to, the
taxation authority is classified as operating cash flows.
p) Impairment Of Assets
At each reporting date, the consolidated entity reviews the
carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered
an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). Where the asset does not
generate cash flows that are independent from other assets, the
consolidated entity estimates the recoverable amount of the cash-
generating unit to which the asset belongs.
Intangible assets with indefinite useful lives and intangible assets
not yet available for use are tested for impairment annually and
whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and
56
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of
money and the risk specified to the asset for which the estimates of
future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount
of the asset (cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised in the Profit or Loss
immediately.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but only to the extent
that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss
been recognised for the asset (cash-generating unit) in prior years.
A reversal of an impairment loss is recognised in the Profit or Loss
immediately.
q) Leases
The Group considers whether a contract is, or contains, a lease. A
lease is defined as ‘a contract, or part of a contract, that conveys
the right to use an asset (the underlying asset) for a period of time
in exchange for consideration’. To apply this definition the Group
assesses whether the contract meets three key evaluations which
are whether:
• the contract contains an identified asset, which is either
explicitly identified in the contract or implicitly specified by
being identified at the the time the asset is made available to
the Group;
• the Group has the right to obtain substantially all of the
economic benefits from use of the identified asset throughout
the period of use, considering its rights within the defined
scope of the contract; or
• the Group has the right to direct the use of the identified asset
throughout the period of use. The Group assess whether it has
the right to direct ‘how and for what purpose’ the asset is used
throughout the period of use.
At lease commencement date, the Group recognises a right-of-
use assets and lease liabilities on the balance sheet. The right-
of-use asset is measured at cost, which is made up of the initial
measurement of the lease liability, any initial direct costs incurred
by the Group, an estimate of any costs to dismantle and remove
the asset at the end of the lease, and any lease payments made in
advance of the lease commencement date (net of any incentives
received).
The Group depreciates the right-of-use assets on a straight-line
basis from the lease commencement date to the earlier of the end
of the useful life of the right-of-use assets or the end of the lease
term which is currently between 2 – 6 years. Instead of performing
an impairment review on the right-of-use assets at the date of initial
application, the Group has relied on its historic assessment as to
whether leases were onerous immediately before the date of initial
application of IFRS 16. The Group also assesses the right-of-use
assets for impairment when such indicators exist.
Lease payments included in the measurement of the lease liability
are made up of fixed payments (including in substance fixed),
variable payments based on an index or rate, amounts expected to
be payable under a residual value guarantee and payments arising
from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced
for payments made and increased for interest. It is remeasured to
reflect any reassessment or modification, or if there are changes in
in-substance fixed payments.
The Group has elected to account for short-term leases and leases
of low-value assets using the practical expedients. Instead of
recognising a right-of-use asset and lease liability, the payments in
relation to these are recognised as an expense in profit or loss on a
straight-line basis over the lease term.
r) Comparatives
Where necessary, comparatives have been reclassified and
repositioned for consistency with current year disclosure.
s) Provisions
Provisions are recognised when a present obligation to the future
sacrifice of economic benefits becomes probable, and the amount
of the provision can be measured reliably.
The cumulative expense recognised for equity-settled transactions
at each reporting date until vesting date reflects (i) the extent to
which the vesting period has expired and (ii) the number of awards
that, in the opinion of the Directors of the Group, will ultimately vest.
This opinion is formed based on the best available information at
reporting date. No adjustment is made for the likelihood of market
performance conditions being met as the effect of these conditions
is included in the determination of fair value at grant date.
Notes to the Financial Statements
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at reporting
date, taking into account the risks and uncertainties surrounding
the obligation. Where a provision is measured using the cash flows
estimated to settle the present obligation, its carrying amount is the
present value of those cash flows.
When some or all of the economic benefits required to settle
a provision are expected to be recovered from a third party, the
receivable is recognised as an asset if it is virtually certain that
recovery will be received, and the amount of the receivable can be
measured reliably.
t) Foreign Currency Transactions And Balances
All foreign currency transactions during the financial year are
brought to account using the exchange rate in effect at the date
of the transaction. Foreign currency monetary items at reporting
date are translated at the exchange rate existing at reporting
date. Non-monetary assets and liabilities carried at fair value
that are denominated in foreign currencies are translated at the
rates prevailing at the date when the fair value was determined.
Exchange differences are recognised in profit or loss in the period
in which they arise as defined in AASB 121: The Effects of Changes
in Foreign Exchange Rates.
Foreign subsidiaries that have a functional currency different from
the presentation currency are translated into the presentation
currency as follows:
• At the spot rate at reporting date for assets and liabilities; and
• At average monthly exchange rates for income and expenses.
Resulting differences are recognised within equity in a foreign
currency translation reserve.
u) Other Current Assets
Other current assets comprise prepayments of drug peptide still in
development stage and yet to be used in the Group’s R&D program
and prepayments for certain insurances yet to expire, along with
other general prepayments. The expenditures represent an unused
expense and therefore a decrease in future economic benefit has
yet to be incurred.
v) Share-based Payment Transactions
Benefits are provided to employees of the Group in the form of
share-based payment transactions, whereby employees render
services in exchange for shares or rights over shares (‘equity-
settled transactions’).
The cost of these equity-settled transactions with employees is
measured by reference to the fair value at the date at which they
are granted. The fair value of conditional performance rights is
measured by a Monte Carlo simulation pricing model for those
performance rights with market capitalisation hurdles and either
a binomial or a trinomial model for those performance rights not
linked to the price of the shares of CLINUVEL PHARMACEUTICALS
LTD (‘non-market vesting conditions’). It is determined at grant date
and expensed on a straight-line basis over the vesting period. In
valuing equity-settled transactions, no account is taken of any
performance conditions, other than conditions linked to the price
of the shares of CLINUVEL PHARMACEUTICALS LTD (‘market
conditions’).
The cost of equity-settled transactions is recognised, together with
a corresponding increase in equity, over the period in which the
performance conditions are fulfilled, ending on the date on which
the relevant employees become fully entitled to the award (‘vesting
date’).
Where the terms of an equity-settled award are modified, as a
minimum an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any increase
in the value of the transaction as a result of the modification, as
measured at the date of modification. Where an equity-settled
award is cancelled, it is treated as if it had vested on the date of
cancellation, and any expense not yet recognised for the award is
recognised immediately. However, if a new award is substituted for
the cancelled award, and designated as a replacement award on
the date that it is granted, the cancelled and new award are treated
as if they were a modification of the original award, as described in
the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as
additional share dilution in the computation of earnings per share.
w) Critical Accounting Estimates And Judgment
The Directors evaluate estimates and judgments incorporated
into the financial report based on historical knowledge and best
available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and
economic data, obtained both externally and within the Group.
Key estimates – share-based payments transactions
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments
at the date at which they are granted. The fair value is determined
using either a binomial or a trinomial model, using the assumptions
detailed in Note 23. The total expense is bought to account over
the vesting period which for some instruments requires the group
to form judgements associated with the timing and probability of
vesting conditions.
Key judgements – tax losses
Given the Company’s and each individual entities’ history of losses,
the Group has recognised a deferred tax asset with regard to
unused tax losses and other temporary differences. The Directors
have determined the Group will generate sufficient taxable
income against which the unused tax losses and other temporary
differences can be utilised. The value of tax losses both recognised
and not recognised is included in Note 3.
Uncertainty Over Income Tax Treatments
The Group has adopted Interpretation 23 from 1 July 2019, based
on an assessment of whether it is ‘probable’ that a taxation
authority will accept an uncertain tax treatment. This assessment
takes into account that for certain jurisdictions in which the Group
operates, a local tax authority may seek to open a Group’s books
as far back as inception of the Group. Where it is probable, the
Group has determined tax balances consistently with the tax
treatment used or planned to be used in its income tax filings.
Where the Group has determined that it is not probable that the
taxation authority will accept an uncertain tax treatment, the most
likely amount or the expected value has been used in determining
taxable balances (depending on which method is expected to
better predict the resolution of the uncertainty). There has been
no significant impact from the adoption of Interpretation 23 in this
reporting period.
x) Segment Reporting
A segment is a component of the consolidated entity that earns
revenues or incurs expenses whose results are regularly reviewed
by the chief operating decision makers and for which discrete
financial information is prepared.
It has established entities in more than one geographical area. The
non-current assets that are not held within Australia are immaterial
to the Group. Until April 2020, revenues from reimbursement
57
Notes to the Financial Statements
revenue and commercial sales were 100% earned from entities
within Europe, and Switzerland. The revenues in the prior year was
also 100% earned from entities within Europe, and Switzerland.
In April 2020, the consolidated entity launched SCENESSE®,
its sole commercial product in a second geographical market.
The revenues earned from this second geographic segment
is not material when compared to the revenues earned for the
consolidated entity and is below the quantitiative threshold for
segment reporting. The consolidated entity has one operating
segment within the definition of AASB 8 Operating Segments.
100% of the revenue from sales reimbursements under special
access schemes is generated from three end users (2019: three
end users). 100% of the revenue from commercial sales is from
sixteen end users in Europe and one end user in the USA (2019:
eighteen end users).
2. PROFIT/(LOSS) FROM CONTINUING OPERATIONS
(a) Revenues
Commercial sales of goods
Sales reimbursements
Total revenues
(b) Interest income
Interest income
Total interest income
(c) Other income
Unrealised gain on restating foreign currency creditors and currencies held
Government grants
Realised foreign currency gain on transactions
Miscellaneous
Total other income
(d) Expenses
Clinical, regulatory & commercial overheads
Drug formulation R&D, manufacture & distribution
Regulatory (pre & post marketing) & non-clinical
Business marketing & listing
General operations (incl Board)
Licenses, patents and trademarks
Clinical development
Finance cost
Others
Realised foreign currency loss on transactions
Total expenses
(e) Profit/(loss) before income tax includes the following specific expenses
Employee benefits expense
Share-based payments
Operating lease expense – minimum lease payments
Amortisation of right-of-use assets
Depreciation on property, plant & equipment
Loss on sale of property, plant and equipment
3. INCOME TAX BENEFIT
(a) Income tax benefit comprises of:
Deferred income tax benefit
Deferred tax included in income tax benefit comprises:
Increase in deferred tax assets
Increase in deferred tax liabilities
58
Consolidated Entity
$
$
26,306,148
26,488,768
6,259,275
4,559,008
32,565,423
31,047,776
562,928
562,928
537,460
126,611
116,584
664
781,319
3,893,059
3,624,043
1,928,085
1,888,675
7,962,693
515,981
184,656
25,886
750,121
-
564,657
564,657
886,037
-
-
-
886,037
2,947,764
2,387,770
1,444,358
1,501,946
4,923,055
305,419
91,453
21,114
755,202
5,562
20,773,199
14,383,643
8,417,497
1,658,713
296,481
263,154
164,474
-
6,045,503
139,936
329,955
122,672
91,492
290
Consolidated Entity
2020
$
2019
$
(3,510,388)
(19,333)
(3,751,243)
240,855
(3,510,388)
(498,852)
479,519
(19,333)
(b) Numerical reconciliation of income tax benefit and tax at the statutory rate
Profit before income tax benefit
Tax at the statutory tax rates of 27.5%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Permanent differences - Australia
Recognition of DTA on losses at year end
Recognition of temporary differences - Australia
Income tax benefit
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at 27.5%
(c) Deferred tax assets
Deferred tax asset comprises temporary differences attributable to:
Carry forward tax losses
Intangibles
Provisions
Accrued Expenses
Lease liabilities
Movements
Opening balance
Carry forward tax losses
Deferred tax assets utilised
Intangibles
Lease liabilities
Accrued Expenses
Provisions
(c) Deferred tax liabilities
Deferred tax liability comprises temporary differences attributable to:
Unrealised gains/loss on loans to subsidiaries
Accrued income
Right-of-use assets
Intangibles
Movements
Opening balance
Unrealised gains/loss on loans to subsidiaries
Right-of-use assets
Accrued income
Intangibles
Adjustment to opening balance of unrealised gains/loss on loans to subsidiaries
Total
The tax rate used in this report is the corporate tax rate of 27.5%
Notes to the Financial Statements
Consolidated Entity
2020
2019
13,136,471
18,114,827
3,612,530
4,981,578
1,182,470
257,855
4,795,000
5,239,433
(8,571,113)
(5,768,808)
265,725
(3,510,388)
510,042
(19,333)
46,780,392
85,304,455
12,864,608
23,458,725
6,742,993
3,038,750
449,065
126,932
39,617
15,897
391,263
121,842
19,936
51,469
7,374,504
3,623,260
3,623,260
8,571,113
3,124,408
5,768,808
(4,866,870)
(5,302,558)
57,803
(35,573)
19,681
5,090
(5,039)
51,469
16,820
(30,648)
7,374,504
3,623,260
(3,525,637)
(3,219,746)
(32,429)
(15,142)
10,204
(52,705)
(52,125)
2,428
(3,563,004)
(3,322,148)
(3,322,148)
(2,842,629)
(305,891)
(334,627)
36,983
20,276
7,776
-
(52,125)
(32,330)
(29,983)
(30,454)
(3,563,004)
(3,322,148)
3,811,500
301,112
59
Notes to the Financial Statements
4. TRADE AND OTHER RECEIVABLES
Current
Trade debtors
Interest receivables
Sundry debtors
Total
Consolidated Entity
2020
$
2019
$
6,349,664
3,758,697
117,923
145,097
191,654
205,865
6,612,684
4,156,216
Trade debtors are recognised initially at the amount of consideration that is unconditional, when they are recognised at fair value. They are subsequently measured at amortised cost using the
effective interest method and due to their short-term nature, their carrying amount is considered to be the same as their fair value..
5. INVENTORIES
Current
Raw materials – at cost
Provision for obsolescence – raw materials
Work in progress – at cost
Finished goods – at cost
Total
6. OTHER ASSETS
Current
Prepaid peptide
Other prepayments
Total
7. PROPERTY, PLANT AND EQUIPMENT
Plant and equipment
At cost
Less: accumulated depreciation
Sub-total
Furniture and fittings
At cost
Less: accumulated depreciation
Sub-total
Leasehold improvements
At cost
Less: accumulated amortisation
Sub-total
Total property, plant and equipment
60
Consolidated Entity
2020
$
255,037
(51,655)
380,882
703,650
2019
$
311,839
(75,106)
1,186,686
712,665
1,287,914
2,136,084
Consolidated Entity
2020
$
105,139
403,679
508,818
2019
$
170,458
421,058
591,516
Consolidated Entity
2020
$
2019
$
560,483
(216,643)
343,840
122,555
(82,916)
39,639
758,299
(66,337)
691,962
1,075,441
297,589
(118,585)
179,004
131,348
(71,645)
59,703
128,282
(29,138)
99,144
337,851
Plant And
Equipment
Furniture And
Fittings
Leasehold
Improvements
$
105,709
118,439
(7,883)
1,260
(38,521)
179,004
264,686
(1,792)
1,513
(99,571)
343,840
$
63,030
6,156
-
-
(9,483)
59,703
7,639
(16,432)
16,432
(27,703)
39,639
Carrying amount at 30 June 2018
Additions
Disposals
Depreciation written back on disposal
Depreciations expense
Carrying amount at 30 June 2019
Additions
Disposals
Depreciation written back on disposal
Depreciations expense
Carrying amount at 30 June 2020
8. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
Right-of-use assets
At cost
Less: accumulated amortisation
Total right-of-use assets
Lease liabilities
Lease liabilities - Current
Lease liabilities - Non-current
Total lease liabilities
Notes to the Financial Statements
Consolidated Entity
$
-
128,282
-
-
(29,138)
99,144
630,017
-
-
Total
$
168,739
252,877
(7,883)
1,260
(77,142)
337,851
902,342
(18,224)
17,945
(37,199)
691,962
(164,473)
1,075,441
Consolidated Entity
2020
$
2019
$
1,693,596
(379,659)
1,313,937
491,477
(122,672)
368,805
Consolidated Entity
2020
$
212,331
1,107,224
1,319,555
2019
$
261,251
171,267
432,518
Lease liability is measured at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily
available or the Group’s incremental borrowing rate of 3.5% in 2020 and 1.1% in 2019.
Carrying amount at 30 June 2018
Remeasurement
Amortisation
Carrying amount at 30 June 2019
Additions
Remeasurement
Amortisation
Carrying amount at 30 June 2020
Consolidated Entity
Right-Of-Use Assets
$
-
491,477
(122,672)
368,805
1,304,049
(95,763)
(263,154)
1,313,937
61
Notes to the Financial Statements
9. INTANGIBLE ASSET
Goodwill
At cost
Less: impairment
Total
Consolidated Entity
2020
$
2019
$
185,030
185,030
-
-
185,030
185,030
Goodwill is not amortised but is measured at cost less any accumulated impairment losses. Impairment occurs when a business unit’s recoverable amount falls below the carrying value of its net
assets. The results of the impairment test show that the business unit’s recoverable amount exceeds the carrying value of its net assets, inclusive of goodwill. Consequently, there is no goodwill
impairment as at 30 June 2020.
10. INTERESTS IN SUBSIDIARIES
Name Of Entity
Parent entity
CLINUVEL PHARMACEUTICALS LTD
Controlled entities
A.C.N. 108 768 896 PTY LTD
CLINUVEL (UK) LTD
CLINUVEL, INC.
CLINUVEL AG
CLINUVEL SINGAPORE PTE LTD
VALLAURIX PTE LTD
CLINUVEL EUROPE LIMITED
VALLAURIX MC SARL
11. TRADE AND OTHER PAYABLES
Current
Unsecured trade creditors
Sundry creditors and accrued expenses
Total
(a) Aggregate amounts payable to:
Directors and Director-related entities
Country Of Incorporation
Ownership Interest
2020
2019
Australia
-
-
Australia
United Kingdom
United States of America
Switzerland
Singapore
Singapore
Ireland
Monaco
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
Consolidated Entity
2020
$
2019
$
1,429,855
3,341,726
1,500,214
2,133,067
4,771,581
3,633,281
865,192
420,968
(b) Australian dollar equivalents of amounts payable in foreign currencies not effectively hedged and included in Trade and Sundry creditors:
Israeli Shekel
Singapore dollars
Total
For an analysis of the sensitivity of trade and other payables to foreign currency risk refer to Note 22.
(c) Terms and conditions:
Trade and sundry creditors are non-interest bearing and normally settled on 30 day terms.
10,875
-
10,875
-
170,617
170,617
62
12. PROVISIONS
Current
Employee benefits
Total
Non-current
Employee benefits
Other provision
Total
13. CONTRIBUTED EQUITY
(a) Issued and Paid Up Capital
49,410,338 fully paid ordinary shares (2019: 48,960,633)
Notes to the Financial Statements
Consolidated Entity
2020
$
2019
$
1,676,435
1,676,435
1,065,510
1,065,510
5,290
100,437
105,727
2,030
32,180
34,210
Consolidated Entity
2020
$
2019
$
151,849,375
151,314,175
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from the sale of all
surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a
meeting of the Company. The Company does not have a limited amount of authorised capital and issued shares do not have a par value.
(b) Movements in Ordinary Share Capital
No.
2020
$
Consolidated Entity
No.
2019
$
Balance at the beginning of the financial year
48,960,633
151,314,175
47,824,427
148,614,908
Issued during the year
-
-
33,559
367,205
Conditional rights issues and transferred from conditional rights reserve
449,705
535,200
1,102,647
2,332,062
Less: transaction costs
-
-
-
-
Balance at the end of the financial year
49,410,338
151,849,375
48,960,633
151,314,175
(c) Conditional Performance Rights
During the year the following Conditional Performance Rights were exercised, resulting in the issue of fully paid ordinary shares:
Expiry date
Upon achievement of various performance milestones
Exercise Price
Nil$
Number of Securities
449,705
As at 30 June 2020, the year the following Conditional Performance Rights were exercised, resulting in the issue of fully paid ordinary shares:
Expiry date
Upon achievement of various performance milestones
Exercise Price
Nil$
Number of Conditional Rights
1,102,647
63
Notes to the Financial Statements
14. RESERVES
Conditional Performance Rights reserve:
Balance at the beginning of period
Share-based payment
Transfer to share capital
Lapsed, forfeited rights
Balance at the end of period
Consolidated Entity
2020
$
2019
$
654,324
2,863,901
1,658,713
139,583
(535,200)
(2,332,062)
(26,614)
1,751,223
(17,098)
654,324
The Conditional Performance Rights reserve arises on the grant of conditional performance rights to eligible employees under the Conditional Performance Rights
Plan. Amounts are transferred out of the reserve and into issued capital when the rights are exercised and to retained earnings when rights lapse.
Foreign currency translation reserve:
Balance at the beginning of period
Translating foreign subsidiary to current rate at reporting date
Balance at the end of period
Total reserves
15. LEASE COMMITMENTS
Operating lease commitments
Non-cancellable operating leases contracted for but not capitalised under AASB 16 as it is short-term and are payable as follows:
not later than 1 year
later than 1 year but not later than 5 years
Total
Operating leases comprises commitments for limited license agreement of furnished office accommodation
The limited license agreement has no contingent rental clauses and contains renewal options.
16. EARNINGS PER SHARE (EPS)
(a) Basic earnings per share (cents per share)
(a) Diluted earnings per share (cents per share)
698,092
(592,857)
105,235
618,015
80,077
698,092
1,856,458
1,352,416
Consolidated Entity
2020
$
2019
$
104,983
7,873
112,856
128,128
-
128,128
Consolidated Entity
2020
$
33.8
33.0
2019
$
37.6
36.6
(b) The Weighted Average Number of Ordinary Shares (WANOS) used in the calculation of basic earnings per share
49,260,026
48,190,080
(b) Weighted average number of performance rights on issue in respect of share based payments during the year
1,198,897
1,410,705
(b) The Weighted Average Number of Ordinary Shares (WANOS) used in the calculation of diluted earnings per share
50,458,922
49,600,786
(c) The numerator used in the calculation of basic earnings per share ($)
16,646,859
18,134,160
There have been no other transactions involving ordinary shares or potential ordinary shares that would significantly change the number of ordinary shares
outstanding between the reporting date and the date of the completion of this financial report.
64
17. CASH FLOW INFORMATION
Notes to the Financial Statements
Consolidated Entity
2020
$
2019
$
(a) Reconciliation of cash and cash equivalents
Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the balance sheet as follows:
Cash at bank
Cash on hand
Deposits on call
Term deposits
Security bonds
Total cash and cash equivalents
(b) Reconciliation of cash flows from operating activities with operating profit (loss)
Operating profit after income tax
Non cash flows in operating (loss):
Depreciation expense on property, plant & equipment
Amortisation expense on right-of-use assets
Exchange rate effect on foreign currencies held
Executive share option expense
Unrealised loss (gain) on foreign exchange translation
Loss on sale of non-current assets
Changes in assets and liabilities:
(Increase)/decrease in receivables
(Increase)/decrease in inventories
(Increase)/decrease in other assets
Increase/(decrease) in payables
(Increase)/decrease in deferred tax assets
Increase/(decrease) in provisions
Net cash provided by operating activities
23,872,909
24,438,095
574
622
1,480,550
1,160,062
41,094,576
28,525,000
297,912
144,979
66,746,521
54,268,758
16,646,859
18,134,160
164,474
263,154
(664,084)
1,658,713
(592,857)
-
91,492
122,672
(902,482)
139,583
80,077
290
(2,456,468)
934,055
848,170
(1,494,799)
82,698
1,065,655
(3,510,388)
682,442
(252,454)
1,511,840
(19,333)
111,006
14,188,368
18,456,107
Cash at bank earns floating rates based on daily bank deposit rates. The carrying amounts of cash and cash equivalents represent fair value.
The effective interest rate on short-term deposits was 1.55% (2019: 2.50%). These deposits have an average maturity date of 210 days (2019: 199 days).
18. KEY MANAGEMENT PERSONNEL
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Total
No loans or other transactions existed with key management personnel.
Consolidated Entity
2020
$
2019
$
2,697,942
2,233,334
56,552
57,546
30,000
1,650,663
-
97,135
4,435,157
2,388,015
65
Notes to the Financial Statements
19. AUDITORS’ REMUNERATION
Amounts received or due and receivable by Grant Thornton for:
audit services and review
tax and advisory services
Total
Consolidated Entity
2020
$
97,000
43,000
140,000
2019
$
97,000
-
97,000
20. RELATED PARTY DISCLOSURES
Wholly-owned group transactions
Loans
The loan receivable by CLINUVEL PHARMACEUTICALS LTD from
A.C.N. 108 768 896 Pty Ltd is non-interest bearing. A provision
for non-recovery has been raised in the accounts of CLINUVEL
PHARMACEUTICALS LTD where a deficiency in net assets exists
in A.C.N. 108 768 896 Pty Ltd. The loan to A.C.N. 108 768 896 Pty
Ltd as at 30 June 2020 is $4,370,640 (2019: $4,370,640).
The loan receivable by CLINUVEL PHARMACEUTICALS LTD
from CLINUVEL, INC. is non-interest bearing. Repayment of the
loan will commence upon commercialisation of the Company’s
drug candidate. A provision for non-recovery has been raised in
the accounts of CLINUVEL PHARMACEUTICALS LTD where
a deficiency in net assets exists in CLINUVEL, INC. The loan
to CLINUVEL, INC. as at 30 June 2020 is $12,840,377 (2019:
$11,543,280).
The loan receivable by CLINUVEL PHARMACEUTICALS LTD
from CLINUVEL AG is non-interest bearing. Repayment of the
loan will commence upon commercialisation of the Company’s
drug candidate. A provision for non-recovery has been raised in
the accounts of CLINUVEL PHARMACEUTICALS LTD where
a deficiency in net assets exists in CLINUVEL AG. The loan
to CLINUVEL AG as at 30 June 2020 is $13,945,079 (2019
$13,545,135).
The loan receivable by CLINUVEL PHARMACEUTICALS LTD
from CLINUVEL SINGAPORE PTE LTD is non-interest bearing.
Repayment of the loan will commence upon commercialisation of
the Company’s drug candidate. A provision for non-recovery has
been raised in the accounts of CLINUVEL PHARMACEUTICALS
LTD where a deficiency in net assets exists in CLINUVEL
SINGAPORE PTE LTD. The loan to CLINUVEL SINGAPORE PTE
LTD as at 30 June 2020 is $604,342 (2019: $167,417).
The loan receivable by CLINUVEL PHARMACEUTICALS LTD from
CLINUVEL (UK) LTD is non-interest bearing. Repayment of the
loan will commence upon commercialisation of the Company’s
drug candidate. A provision for non-recovery has been raised in
the accounts of CLINUVEL PHARMACEUTICALS LTD where a
deficiency in net assets exists in CLINUVEL (UK) LTD. The loan
to CLINUVEL (UK) LTD as at 30 June 2020 is $15,661,324 (2019:
$13,670,818).
The loan receivable by CLINUVEL PHARMACEUTICALS LTD from
VALLAURIX PTE LTD is non-interest bearing. Repayment of the
loan will commence upon commercialisation of VALLAURIX PTE
LTD’s product(s). A provision for non-recovery has been raised in
the accounts of CLINUVEL PHARMACEUTICALS LTD where a
deficiency in net assets exists in VALLAURIX PTE LTD. The loan
to VALLAURIX PTE LTD as at 30 June 2020 is $3,615,257 (2019:
$1,322,247).
The loan payable by CLINUVEL PHARMACEUTICALS LTD to
VALLAURIX MC SARL is non-interest bearing. Repayment of the
loan will commence upon commercialisation of the Company’s
drug candidate. A provision for non-recovery has been raised in
the accounts of CLINUVEL PHARMACEUTICALS LTD where a
deficiency in net assets exists in VALLAURIX MC SARL. The loan
from VALLAURIX MC SARL as at 30 June 2020 is -$1,949,434
(2019: $0). VALLAURIX MC SARL was incorporated as a wholly-
owned entity of the consolidated group during 2019-20.
Director related and Key Management Personnel transactions and
entities:
There are no transactions and relationships in existence as at 30
June 2020 between Directors and the Company and its related
entities.
21. SEGMENT INFORMATION
A segment is a component of the consolidated entity that earns
revenues or incurs expenses whose results are regularly reviewed
by the chief operating decision makers and for which discrete
financial information is prepared.
It has established entities in more than one geographical area. The
non-current assets that are not held within Australia are immaterial
to the Group. Until April 2020, revenues from reimbursement
revenue and commercial sales were 100% earned from entities
within Europe, and Switzerland. The revenues in the prior year was
also 100% earned from entities within Europe, and Switzerland.
In April 2020, the consolidated entity launched SCENESSE®,
its sole commercial product in a second geographical market.
The revenues earned from this second geographic segment
is not material when compared to the revenues earned for the
consolidated entity and is below the quantitiative threshold for
segment reporting. The consolidated entity has one operating
segment within the definition of AASB 8 Operating Segments.
100% of the revenue from sales reimbursements under special
access schemes is generated from three end users (2019: three
end users). 100% of the revenue from commercial sales is from
sixteen end users in Europe and one end user in the USA (2019:
eighteen end users).
22. FINANCIAL INSTRUMENTS
CLINUVEL PHARMACEUTICALS LTD and consolidated entities
have exposure to the following risks from its use in financial
instruments:
a) Market Risk
b) Credit Risk
c) Liquidity Risk
The Board of Directors oversees and reviews the effectiveness of
the risk management systems implemented by management. The
Board has assigned responsibility to the Audit and Risk committee
to review and report back to the Board in relation to the Company’s
risk management systems.
a) Market Risk
Market risk is the risk of changes to market prices of foreign
exchange purchases, interest rates and/or equity prices resulting
in a change in value of the financial instruments held by the
consolidated entity. The objective to manage market risk is to
ensure exposures are contained within acceptable parameters, to
minimise costs and to stabilise existing assets.
Foreign Currency Risk
The consolidated entity is exposed to foreign currency risk on future
commercial transactions and recognised assets and liabilities that
are denominated in a currency other than the functional currency
66
Notes to the Financial Statements
of each of the Group’s entities, primarily US dollars (USD), Euros
(EUR), Swiss francs (CHF), Singapore dollars (SGD) and Great
British pounds (GBP). The parent entity is exposed to the risk of
its cash flows being adversely affected by movements in exchange
rates that will increase the Australian dollar value of foreign currency
payables. It is also exposed to the risk of movements in foreign
currency exchange rates for those currencies which sales and
reimbursement receipts are received.
The consolidated entity’s policy of managing foreign currency
risk is to hold foreign currencies equivalent to the cash outflow
projected over minimum 30 days by the placement of market
orders or have in place forward exchange contracts to achieve
a target rate of exchange, with protection floors in the event of a
depreciating Australian dollar exchange rate, to run for the time
between recognising the exposure and the time of payment. In the
event of an appreciating Australian dollar, the amount of foreign
currency held is minimised at a level to only meet short term
obligations in order to maximise gains in an appreciating Australian
currency. CLINUVEL does not engage in speculative transactions
in its management of foreign currency risk. No forward exchange
contracts had been entered into as at 30 June 2020 and as at 30
June 2019.
The consolidated entities exposure to foreign currency risk at 30 June 2020
Cash and
Cash
Equivalents
Trade Debtors
and Other
Assets
Trade, Other
Payables and
Provisions
2020
TOTAL
Cash and
Cash
Equivalents
Trade Debtors
and Other
Assets
Trade, Other
Payables and
Provisions
2019
TOTAL
Consolidated Entity
USD
EUR
CHF
GBP
SGD
ILS
2,026,377
1,325
(513,704)
1,513,998
1,302,907
1,559
(750,678)
553,788
9,405,452
2,472,442
(1,720,287)
10,157,607
9,067,811
1,836,455
(395,322)
10,508,944
2,118,158
1,057,956
456,886
1,559,596
-
32,982
150,072
-
(322,229)
(336,497)
(171,080)
(25,771)
2,853,885
3,092,473
153,371
1,186,256
429,935
136,686
(261,878)
(256,041)
3,260,530
1,066,901
1,538,588
1,016,677
35,149
(1,211,972)
(160,146)
(25,771)
-
-
-
-
Sensitivity Analysis Of Foreign Currency Risk
During the financial year the Company had a principal foreign
currency transaction risk exposure to the Euro. Assuming all other
variables remain constant, a depreciation in the Australian dollar is
advantageous to the consolidated entity as sales receipts received
in Euro foreign currency allows for conversion to a higher amount of
Australian dollars.
Price Risk
CLINUVEL PHARMACEUTICALS LTD and its consolidated entities
was formerly exposed to price risk in its investments in income
securities classified in the Statement of Financial Position as
held for trading. The consolidated entity no longer holds income
securities. Neither the consolidated entity nor the parent is exposed
to commodity price risk.
For the consolidated entity, a 5% appreciation of the Australian
dollar against the Euro currency would have decreased profit and
loss and equity by $939,741 for the year ended 30 June 2020
(2019: $1,303,471), on the basis that all other variables remain
constant. 5% is considered representative of the market volatility in
the Australian dollar/Euro rate for the period.
For the consolidated entity, an appreciation of the Australian dollar
against the Euro currency would have an equal but opposite effect
to the above, on the basis that all other variables remain constant.
The Group’s exposure to other foreign currency movements is not
considered as material.
Interest Rate Risk
The consolidated entity holds fixed interest bearing assets therefore
exposure to interest rate risk exists. It does not hold interest bearing
liabilities.
The consolidated entity currently finances its operations through
reserves of cash and liquid resources and does not have a
borrowing requirement. In order to be protected from, and to
take advantage of, interest rate movements it is the consolidated
entity’s policy to place cash into deposits and other financial assets
at both fixed and variable (floating) rates. The Board monitors the
movements in interest rates in combination with current cash
requirements to ensure the mix and level of fixed and floating
returns is in the best interests of the consolidated entity.
Sensitivity Analysis of Interest Rate Risk
For the consolidated entity, at 30 June 2020, if interest rates
had changed by +/- 75 basis points from the year-end rates
(a movement considered reflective of the level of interest rate
movements throughout the course of the financial year), with effect
from the beginning of the year, profit and equity would be $449,761
higher/lower (2019: $352,965 higher/ lower). This analysis assumes
all other variables are held constant.
b) Credit Risk
Credit risk arises from the potential failure of counterparties to meet
their contractual obligations, resulting in a loss to the consolidated
entity.
Credit risk in relation to the consolidated entity is the cash and cash
equivalents deposited with banks, trade and other receivables.
Exposure to credit risk in trade debtors is limited to over twenty
counterparties across German, Italian, Swiss, Dutch, US and other
medical institutions who are reimbursed by government or private
insurance payors.
The maximum credit exposure is the carrying value of the cash and
cash equivalents deposited with banks, trade and other debtors
and foreign, wholly-owned subsidiaries.
c) Liquidity Risk
Liquidity risk is the risk the consolidated entity will not be able to
meets its financial obligations when they fall due. It is the policy
of the consolidated entity to ensure there is sufficient liquidity to
meet is liabilities when due without incurring unnecessary loss or
damage. The consolidated entity holds cash and cash equivalents
in liquid markets. It does not hold financing facilities, overdrafts or
borrowings.
Fair Value Estimation
The fair value of financial assets and financial liabilities must
be estimated for recognition and measurement for disclosure
purposes.
The fair value of financial instruments traded in active markets
is based on quoted market prices at reporting date. The quoted
market price for the consolidated entity is the bid price. For longer
term debt instruments held by the consolidated entity, dealer
quotes are used to determine fair value.
67
Notes to the Financial Statements
The carrying value of trade payables is assumed to approximate
their fair values due to their short-term nature.
The consolidated entity manages its liquidity needs by carefully
identifying expected operational expenses by month and ensuring
sufficient cash is on hand, across appropriate currencies, in the
day-to-day bank accounts for a minimum 30 day period. When
further liquidity is required the consolidated entity draws down on
its cash under management to service future liquidity needs.
Contractual maturities of financial assets as at 30 June 2020
Cash and cash equivalents
Carrying amount
6 months or less
Greater than 6 months
Total
Other financial assets (includes trade and other receivables)
Carrying amount
6 months or less
Greater than 6 months
Total
Contractual maturities of financial liabilities as at 30 June 2020
Trade and other payables
Carrying amount
6 months or less
Greater than 6 months
Total
Lease liabilities
Carrying amount
6 months or less
Greater than 6 months
Total
22. EMPLOYEE BENEFITS
The aggregate employee benefit liability is comprised of:
Provision for annual leave
Provision for long service leave
Accrued FBT, payroll, superannuation, pension funds, employee insurances
Total
68
is
limited
Capital Risk Management
The consolidated entity’s equity
to shareholder
contributions, supported by the cash inflows received from
providing SCENESSE® to EPP patients under both the full cost
special access reimbursement programs and from commercial
sales currently in Europe and Switzerland. Its capital management
objectives are limited to ensuring the equity available to the
Company will allow it to continue as a going concern and to realise
adequate shareholder return by progressing in its developmental
research of SCENESSE®,
for successful marketing
to file
authorisation in new jurisdictions and achieving a status whereby
revenues will consistently exceed expenditures.
Consolidated Entity
2020
$
2019
$
66,746,521
54,268,758
52,406,687
52,220,997
14,339,834
2,047,761
66,746,521
54,268,758
6,612,684
6,597,634
15,050
4,156,216
4,058,659
97,557
6,612,684
4,156,216
Consolidated Entity
2020
$
2019
$
4,771,581
4,659,117
112,464
3,633,281
3,541,897
91,384
4,771,581
3,633,281
1,319,555
144,170
1,175,385
1,319,555
432,518
119,918
312,600
432,518
Consolidated Entity
2020
$
2019
$
1,062,232
619,492
2,016,415
3,698,139
628,397
439,143
1,116,203
2,183,743
Notes to the Financial Statements
23. SHARE-BASED PAYMENTS
The consolidated entity has two conditional performance rights
schemes which are ownership based for key management
personnel and select consultants (including Directors) of the
Company.
The number of rights granted is subject to approval by the
Remuneration Committee. Rights currently have specific terms and
conditions, being the achievement of performance milestones set
by the Directors of the consolidated entity.
a) Conditional Performance Rights Plan (2009)
The Conditional Performance Rights Plan (2009) is available
to eligible employees of the Company. Any issue of rights to
executive Directors requires shareholder approval in accordance
with ASX Listing Rules. All rights convert to one ordinary share of
the consolidated entity are issued for nil consideration, have no
voting rights, are non-transferable and are not listed on the ASX.
They can be converted to ordinary shares at any time once the
vesting conditions attached to the rights have been achieved,
whereby they will be held by a Scheme Trustee on behalf of the
eligible employee for up to seven years. The eligible employee can
request for shares to be transferred from the Scheme Trust after
seven years or at an earlier date if the eligible employee is no longer
employed by the Company or all transfer restrictions are satisfied
or waived by the Board in its discretion. It is no longer intended to
issue performance rights under the 2009 Plan.
b) Performance Rights Plan (2014)
The Performance Rights Plan (2014) is available to eligible persons
of the Company. Any issue of rights to executive Directors requires
shareholder approval in accordance with ASX Listing Rules. All
rights convert to one ordinary share of the consolidated entity are
issued for nil consideration, have no voting rights, are not listed
on the ASX and are non-tradeable (other than with prior written
Board consent). They can be converted to ordinary shares at
any time once the vesting conditions attached to the rights have
been achieved, whereby, at the discretion of the Board, they will
be held by a Scheme Trustee on behalf of the eligible person. The
eligible person cannot trade in the shares held by the Scheme Trust
without prior written Board consent until the earlier of seven years
from grant date of performance right, when the eligible person
ceases employment or when all transfer restrictions are satisfied
or waived by the Board in its discretion. Performance Rights under
this plan lapse after seven years from grant date.
As at 30 June 2020, the Company via its wholly owned subsidiary
ACN 108768896 Pty Ltd acting in its capacity as trustee for the
2009 Scheme Trust and the 2014 Plan Trust, holds 4,530,568
shares (2019: 4,440,801 shares).
The following share-based payment arrangements were in existence at 30 June 2020
Performance Rights
Series
Number Grant date
Expiry Date
Exercise Price
Issued 16/09/2011
127,710
16/09/2011
Issued 16/11/2011
25,000
16/11/2011
The earlier of achievement of specific performance milestones
and cessation of employment/directorship
The earlier of achievement of specific performance milestones
and cessation of employment/directorship
$ Nil
$ Nil
Fair Value at Grant
Date
Between $0.55 and
$0.72
$0.67
Holdings of All Issued Conditional Performance Rights – 2020
Expired &
Lapsed
Balance at End
of Year
Vested and
Exercisable
Performance
Rights Series
Balance at Start
of Year
Issued as
Compensation
Issued
Issued
Issued
Issued
Issued
Total
Weighted average
exercise price
208,332
263,206
65,000
105,875
-
642,413
$Nil
-
-
-
-
-
-
$Nil
Exercised
(208,332)
(135,496)
-
-
-
(40,000)
(105,875)
-
-
-
-
127,710
25,000
-
-
(449,703)
(40,000)
152,710
$Nil
$Nil
$Nil
Unvested
-
127,710
25,000
-
-
152,710
$Nil
-
-
-
-
-
-
$Nil
Performance Rights were priced using either a binomial or trinomial pricing model. There is no limitation on the life of the right. Expected volatility of each right is
based on the historical share price for the approximate length of time for the expected life of the rights. It is assumed that the consolidated entity will not pay any
dividends during the life of the option, and the risk free rate used in the pricing model is assumed to be the yield on ranging from 1 year to 10 year Government
bonds. The exercise conditions are non-marketable and a discount for lack of marketability was applied to the pricing model.
On 26 August 2020 1,513,750 conditional performance rights were issued to the Managing Director, consequent to shareholder approval at the 2019 Annual
General Meeting. These performance rights were priced using Monte Carlo simulation pricing model for those performance rights with market capitalisation
hurdles and a binomial model for those performance rights linked to non-market vesting conditions. The vesting period is up to 4 years from date of shareholder
approval. Expected volatility of each right is based on the historical share price for the approximate length of time for the expected life of the rights.
69
Notes to the Financial Statements
Holdings of All Issued Conditional Performance Rights – 2019
Performance
Rights Series
Balance at Start
of Year
Issued as
Compensation
Issued
Issued
Issued
Issued
Issued
Issued
Issued
Total
Weighted average
exercise price
299,999
375,986
65,000
75,000
674,975
254,100
5,500
-
-
-
-
-
-
-
Exercised
(91,667)
(112,780)
-
(75,000)
(674,975)
(148,225)
-
1,750,560
-
(1,102,647)
$Nil
$Nil
$Nil
Expired &
Lapsed
Balance at End
of Year
Vested and
Exercisable
-
-
-
-
-
-
(5,500)
(5,500)
$Nil
208,332
263,206
65,000
-
-
105,875
-
642,413
$Nil
-
-
-
-
-
-
-
-
$Nil
Unvested
208,332
263,206
65,000
-
-
105,875
-
642,413
$Nil
Performance Rights were priced using either a binomial or trinomial pricing model. There is no limitation on the life of the Right. Expected volatility of each Right is
based on the historical share price for the approximate length of time for the expected life of the rights. It is assumed that the consolidated entity will not pay any
dividends during the life of the option, and the risk free rate used in the pricing model is assumed to be the yield on ranging from 1 year to 10 year Government
bonds. The exercise conditions are non-marketable and a discount for lack of marketability was applied to the pricing model.
24. CLINUVEL PHARMACEUTICALS LTD PARENT COMPANY INFORMATION
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued equity
Share–based payments reserve
Accumulated losses
Total equity
Financial performance
Net profit for the year
Total comprehensive income
Consolidated Entity
2020
$
2019
$
58,556,682
45,924,710
20,704,937
15,200,229
79,261,619
61,124,939
2,460,733
2,702,525
5,290
2,030
2,466,023
2,704,555
151,849,375
151,314,175
1,751,223
654,324
(76,805,002)
(93,548,115)
76,795,596
58,420,384
16,769,727
17,002,595
16,769,727
17,002,595
25. SUBSEQUENT EVENTS
There have not been any matters financial in nature, other than
reference to the financial statements that has arisen since the end
of the financial year that has affected or could significantly affect
the operations of the consolidated entity, other than:
• On 26th August 2020, the Board of Directors declared an
unfranked dividend of $0.025 per ordinary share.
26. ADDITIONAL COMPANY INFORMATION
CLINUVEL PHARMACEUTICALS LTD is a listed public company
incorporated and operating in Australia.
The Registered office is:
Level 11, 535 Bourke Street
Melbourne VIC 3000
Ph: (03) 9660 4900
70
DIRECTORS’ DECLARATION
In the opinion of the Directors:
1) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:
a) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its performance for the year
ended on that date; and
b) complying with Accounting Standards; and
c) complying with International Financial Reporting Standards as disclosed in Note 1
2) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable;
and
3) the audited remuneration disclosures set out in pages 36 to 47 of the Directors Report comply with Section 300A of the Corporations
Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors. The Directors have been given the declarations by the
Chief Executive Officer and Chief Financial Officer required by Section 295A of the Corporations Act 2001.
Dr. Philippe Wolgen, MBA MD
Director
Dated this 26th day of August, 2020
71
Independent Auditor's Report
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Clinuvel Pharmaceuticals Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Clinuvel Pharmaceuticals Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit
or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash
flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or
refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL).
GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the
member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not
liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia
Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia
Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
72
Key audit matter
Deferred tax asset – Note 3
Clinuvel has recognised tax assets of $3,811,500 (2019:
$301,112) in accordance with AASB 112 Income Taxes.
These are primarily attributable to historic losses generated by
the income tax consolidated group. An assessment is required
as to whether sufficient future taxable profits are likely to be
generated to enable the assets to be realised.
This area is a key audit matter due to the degree of judgement
required in assessing management’s estimates of future
taxable profits to enable the assets to be realised.
Share based payments – Note 23
In November 2019, the Group granted 1,513,750 rights to the
Group’s CEO. The performance rights granted were allocated
in two tranches: Tranche A is conditional on market
capitalisation over a four year period from the Grant date and
Tranche B is conditional on achieving non-market based
performance conditions over a four year period from the Grant
date. Under AASB 2 Share Based Payments, management
are required to value the performance rights and assess the
expected vesting date for achievements of the milestones.
Performance rights were valued at $8.2m for accounting and
reporting purposes using the Monte Carlo simulation and
Binomial Options Valuation method. The value will be
expensed over the vesting period (up to 4 years) and the
share based payment expense for the financial year was
$1.66m
This area is a key audit matter due to the degree of judgement
required in valuing the performance rights as well as
determining estimates of the vesting dates.
Independent Auditor's Report
How our audit addressed the key audit matter
Our procedures included, amongst others:
• Holding discussions with management to obtain an
understanding of the policy applied for the recognition of
deferred tax and assessment of profitability of the group in the
near future;
• Evaluating managements forecast of future taxable income by
assessing the key underlying assumptions such as future
taxable income against historic performance and market
trends;
• Assessing the competence and objectivity of managements tax
expert used, to assist in the preparation of the valuation of the
deferred tax asset;
• Checking the accuracy of the input data and evaluating
formulas and assumptions applied in the computation of the
deferred tax asset;
• Utilising our internal taxation specialists to assist in this
assessment of the determination of the tax bases; and
• Assessing the adequacy of the group’s disclosure in relation
the carrying value of deferred tax assets.
Our procedures included, amongst others:
• Reviewing the relevant agreements to obtain an understanding
of the contractual nature of the share-based payment
arrangements;
• Obtaining management's option valuations and associated
share based payment support;
• Utilising our corporate finance specialist to review the valuation
performed by management’s expert;
• Holding discussions with management to understand the
share-based payment arrangements in place and, where
applicable, evaluating management’s assessment of the
likelihood of meeting the performance conditions attached to
the share based payments;
• Reviewing management’s determination of fair value of the
share based payments issued, considering the
appropriateness of the valuation model used and assessing
the valuation inputs;
• Assessing the allocation of the share based payment expense
over the relevant vesting period (assessing appropriateness of
the vesting period)
• Evaluating management’s forecasts to validate consistency of
vesting dates for performance milestones; and
• Assessing the adequacy of the disclosures in the financial
report.
73
Independent Auditor's Report
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors
determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1_2020.pdf. This description forms part of
our auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 36 to 47 of the Directors’ report for the year ended 30 June
2020.
In our opinion, the Remuneration Report of Clinuvel Pharmaceuticals Limited, for the year ended 30 June 2020 complies
with section 300A of the Corporations Act 2001.
74
Independent Auditor's Report
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
B A Mackenzie
Partner – Audit & Assurance
Melbourne, 26 August 2020
75
Independent Auditor's Report
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Clinuvel Pharmaceuticals Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Clinuvel
Pharmaceuticals Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have
been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
B A Mackenzie
Partner – Audit & Assurance
Melbourne, 26 August 2020
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
76
SHAREHOLDER INFORMATION
AS AT 18 SEPTEMBER 2020
Additional information as at 18 September 2020 required by the ASX and not shown elsewhere in this report is as follows:
1. SHAREHOLDING
A) DISTRIBUTION OF SHAREHOLDER NUMBERS
ORDINARY FULLY PAID SHARES
CATEGORY (SIZE OF HOLDING)
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 & Over
TOTAL
TOTAL HOLDERS
4,206
880
148
179
25
5,438
B) SHAREHOLDINGS HELD IN LESS THAN MARKETABLE PARCELS
TOTAL
MINIMUM PARCEL SIZE
Minimum $500.00 parcel at $22.88
per unit
22
C) Substantial Shareholdings
Name
The Bank of New York Mellon Corporation1
A.C.N. 108 768 896 Pty Ltd2
Ender 1 LLC3
1 As disclosed in substantial holder notice dated 6 December 2019.
UNITS
1,274,323
1,978,656
1,100,237
5,245,205
39,811,917
49,410,338
HOLDERS
318
% OF ISSUED CAPITAL
2.58
4.00
2.23
10.62
80.57
100.00
UNITS
2,224
No. Ordinary shares & American depository receipts
4,807,380
4,526,214
2,340,824
2 As disclosed in substantial holder notice dated 13 March 2019. This is inclusive of the relevant interest of shareholder Dr Philippe Jacques Wolgen, for 3,399,810 quoted ordinary shares, as
disclosed in a further substantial holder disclosure notice dated 26 August 2020. Actual registered shareholding as at 18 September is 4,324,693.
3 As disclosed in substantial holder notice dated 16 September 2013. Actual registered shareholding as at 18 September 2020 is 2,590,824.
D) VOTING RIGHTS
The voting rights attaching to each class of equity securities are set out below:
(i) ORDINARY SHARES
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
(ii) PERFORMANCE RIGHTS
Performance Rights have no voting rights.
77
Shareholder Information
E) LARGEST SHAREHOLDERS
POSITION
NAME
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ACN 108 768 896 PTY LTD
ENDER 1 LLC
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
M BADCOCK AND P CHU SUPERANNUATION FUND PTY LTD
DR MARK EDWIN BADCOCK
BNP PARIBAS NOMS PTY LTD
NATIONAL NOMINEES LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
BNP PARIBAS NOMS (NZ) LTD
MR DAVID WILLIAM TREVORROW
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD
VULCANCREST PTY LTD
MS NICOLETTA MUNER
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MR DAVID JOHN LEWIS
TOP 20 HOLDERS OF ORDINARY FULLY PAID SHARES (TOTAL)
TOTAL REMAINING HOLDERS BALANCE
NUMBER OF ORDINARY FULLY
PAID SHARES HELD
% HELD OF ISSUED ORDINARY
CAPITAL
14,860,373
9,877,178
4,324,693
2,590,824
1,540,396
1,002,756
636,062
628,447
567,890
557,672
481,667
323,059
261,411
222,222
220,669
213,770
200,000
187,625
187,000
183,165
39,066,879
10,343,459
30.08
19.99
8.75
5.24
3.12
2.03
1.29
1.27
1.15
1.13
0.97
0.65
0.53
0.45
0.45
0.43
0.40
0.38
0.38
0.37
79.07
20.93
78
2. COMPANY SECRETARY
The name of the Company Secretary is:
Darren Keamy
3. REGISTERED OFFICE
The principle registered office in Australia is:
Level 11, 535 Bourke Street
Melbourne, VIC 3000, Australia
Telephone: +61 3 9660 4900
Fax: +61 3 9660 4999
Email: mail@clinuvel.com
Website: http://www.clinuvel.com
4. REGISTER OF SECURITIES
Computershare Investor Services Pty Ltd
Yarra Falls, 453 Johnston St, Abbotsford,
VIC 3067, Australia
Telephone: +61 3 9415 4000
5. AUSTRALIAN SECURITIES EXCHANGE LIMITED
Quotation has been granted for all the ordinary shares on all
Member Exchanges of the Australian Securities Exchange Limited
(ASX):
(ASX: CUV).
The Company’s shares are also traded on XETRA, an electronic
trading system, based in Frankfurt, Germany, under the code UR9.
In the USA, the Company’s Level 1, American Depositary Receipts
(ADRs), trade under the code CLVLY. Each ADR of the Company is
equivalent to one ordinary share of the Company, as traded on the
ASX. The Bank of New York Mellon is the depositary bank.
6. RESTRICTED SECURITIES
Restricted securities on issue at June 30, 2020: Nil.
Shareholder Information
7. DIRECTORY
NON-EXECUTIVE CHAIR
Willem Blijdorp
NON-EXECUTIVE DIRECTORS
Brenda Shanahan, Dr Karen Agersborg, Susan Smith, Prof Jeffrey
Rosenfeld
MANAGING DIRECTOR AND CHIEF EXECUTIVE
OFFICER
Dr Philippe Wolgen
CHIEF SCIENTIFIC OFFICER
Dr Dennis Wright
CHIEF FINANCIAL OFFICER AND COMPANY
SECRETARY
Darren Keamy
AUDITOR
Grant Thornton Australia Limited
Collins Square, Tower 5, Level 22, 727 Collins Street, Melbourne,
VIC 3008, Australia
BANKER
National Australia Bank (NAB)
Western Branch, 460 Collins St, Melbourne, VIC 3000, Australia
LEGAL COUNSEL
Arnold Bloch Leibler
Level 21, 333 Collins St, Melbourne, VIC 3000, Australia
Sidley Austin LLP
Woolgate Exchange, 25 Basinghall Street,
London, EC2V 5HA, United Kingdom
IP LAWYER
Dipl.-Ing Peter Farago
Baadestr 3, Munich 80, Germany
79
MARKET PERFORMANCE
ASX:CUV – SHARE PRICE, A$
$45.00
$40.00
$35.00
$30.00
$25.00
$20.00
$15.00
$10.00
Jul 19
Oct 19
Jan 20
April 20
Jul 20
ASX:CUV – DAILY TRADING VOLUME
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
Jul 19
80
Oct 19
Jan 20
April 20
Jul 20
GLOSSARY
ALPHA-MELANOCYTE STIMULATING HORMONE
(α-MSH)
A peptide hormone which activates or stimulates the production
and release of (eu)melanin in the skin (melanogenesis).
EUROPEAN MEDICINES AGENCY (EMA)
The decentralised body of the European Union regulating medical
drugs and devices.
EUMELANIN
A black or brown pigment mainly concerned with the protection of
the skin by absorbing incoming UV radiation. This protective ability
warrants melanin to be termed a photoprotectant (a substance
capable of providing protection against radiation from the sun).
α-MSH acts specifically to stimulate (eu)melanin synthesis.
FOOD AND DRUG ADMINISTRATION (FDA)
The USA’s regulatory agency for food, tobacco, medicines, and
devices.
PHASE I
The first trials of a new drug candidate in humans, Phase I trials
are designed to evaluate how a new drug candidate should be
administered, to identify the highest tolerable dose and to evaluate
the way the body absorbs, metabolises and eliminates the drug.
PHASE II
A Phase II trial is designed to continue to test the safety of the drug
candidate, and begins to evaluate whether, and how well, the new
drug candidate works (efficacy). Phase II trials often involve larger
numbers of patients.
PHASE IIB/PHASE III
Advanced-stage clinical trials that should conclusively demonstrate
how well a therapy based on a drug candidate works. Phase III
trials can be longer and typically much larger than Phase II trials,
and frequently involve multiple test sites. The goal is statistically
determining whether a therapy clinically improves the health of
patients undergoing treatment while remaining safe and well
tolerated.
MELANIN
The dark pigment synthesised by melanocytes; responsible for skin
pigmentation.
PHARMACODYNAMICS
The study of the time course of a drug’s actions in the body.
MELANOCORTINS
Melanocortins are a group of peptide hormones, consisting of
adrenocorticotropin hormone (ACTH), α-melanocyte stimulating
hormone (α-MSH), beta-melanocyte-stimulating hormone (β-MSH),
and gamma-melanocyte-stimulating hormone (γ-MSH) and are
derived from proopiomelanocortin (POMC) in the pituitary gland.
MELANOCORTIN RECEPTORS
Melanocortins exert their effects by binding to and activating
melanocortin receptors, a family of five (MC1R to MC5R) seven-
transmembrane G-protein coupled receptors (GPCRs) that affect
different body functions. The receptors are widespread throughout
the body, exhibiting myriad ligand affinities, tissue and cell
distribution, and downstream effects.
MELANOGENESIS
The process whereby melanin is produced in the body.
NARROWBAND ULTRAVIOLET B (NB-UVB)
PHOTOTHERAPY
Therapy which utilises an ultraviolet B light source to activate
melanin in vitiliginous lesions of the skin.
OECD
The Organisation for Economic Co-operation and Development. A
group of 34 member countries that discuss and develop economic
and social policy.
PHARMACOKINETICS
The part of pharmacology that studies the release and availability
of a molecule and drug in the human body.
PHOTODERMATOSES
Photodermatoses are a variety of skin conditions that develop as a
result of exposure to ultraviolet radiation or visible light.
PHOTOPROTECTION
Protection from light and ultraviolet radiation. Melanin provides
natural photoprotection to skin, whilst sunscreens provide artificial
photoprotection.
SUBCUTANEOUS
Underneath the skin.
SUSTAINED RELEASE/CONTROLLED-RELEASE
Process whereby a drug is released from a formulation over a
period of time.
THERAPEUTIC GOODS ADMINISTRATION (TGA)
Australia’s regulatory agency for medicinal products and devices.
ULTRAVIOLET (UV) RADIATION
Part of the electromagnetic spectrum at wavelengths below 400
nanometers, also called the invisible portion of light. There are
three sub-types of UV: UVC <280 nm; UVB 280 – 320 nm; UVA
320 – 400 nm
An extensive glossary of terms relevant to CLINUVEL’s work can be found at https://www.clinuvel.com/glossary.
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