Clinuvel on top of the world after FDA approval caps off rise of 4000%

The FDA’s decision on Clinvel Pharmaceuticals’ (ASX: CUV) SCENESSE treatment for erythropoietic protoporphyria capped off a stellar ride that’s lasted several years.

Erthropoietic protoporphyria (EPP) is a rare skin order causing severe reactions to lights such as burns and ulcers. It occurs quickly — within minutes of sunlight exposure.

It was initially developed in 1987 at an Arizonian university then licensed in 1999 by Australian chemist Wayne Miller.

Clinuvel entered the ASX in 2001 and grew from $1 to over $45 on Wednesday, representing growth of more than 4000 per cent. The latest catalyst was the American authority’s approval of its drug to enter the market. It rose 60 per cent on Wednesday although retreated 11 per cent to $40 today.

‘An outcome like this today gives stimulus’

Yesterday, Stockhead spoke with CEO Philippe Wolgen who has served since 2005 and he recognised yesterday was a monumental achievement.

“We now have the go ahead to go to the US and commercialise the product the same way we’ve always done it,” he said. “So now we form our team and sell it ourselves. It means you are in control of your product — you don’t need to involve intermediate parties that will negotiate prices — we want to do that.”

He also said he wanted FDA approval to use the drug on Vitaligo too. This is a more common skin disorder where the pigment producing cells of the skin are absent or idle. This results in depigmented patches of skin appearing and affects up to 2 per cent of the global population.

“To have your whole strategy validated — that’s an important part. You can write incredible business cases but unless you get an endorsement for it [the drug] remains theory.”

“One of my tasks is to motivate staff and you have to turn it into [something] meaningful if you have people to execute it, and we were fortunate to retain the staff. An outcome like this today gives stimulus [to them]”.

The future

A similar biotech success story was Opthea (ASX: OPT) whose anti-AMD drug aced its clinical trial. Brokers such as Goldman Sachs began to speculate the company could be acquired or enter into an out-licensing agreement. Its CEO Megan Baldwin was open to it.

Stockhead put to him the proposition that it could out-license its drug or put the company up for sale. Wolgen opposed this and argued the job was far from done.

“That is not our model, out-licensing means you lose control of your product and let someone distribute it, that’s not how we build value.

“In Europe, we distribute and try to control the entire value chain, the same in the US.”

He said this is why he rejected a 2014 bid from major US biotech Retrophin for $95m.

“We believe we have more value to be built in this company.”

The past

There are several other biotechs on the ASX. But few others possess such a large valuation and have had such a long, momentous journey.

Stockhead asked Wolgen to reflect on that journey and to name the most important moments for his company.

“If you want to single out a few, one is the first time your technology is working and meaningful — when you see it’s working in the hands of global experts.

“I worked for a decade with a phenomenal man who always said to me ‘don’t believe the mice’ — you need to see your technology in the human biology,” he said, alluding to the common practice of testing drugs in mice before humans.

Firms often boast that drugs work in mice and shareholders get excited — but this rarely translates to humans. Over 90 per cent of drugs fail the course from Phase I to market.

“Another significant event is when you discover an insurer is willing to write the cheque for your technology. It means you can secure a revenue stream.”

Knocked down but back up again

He also said European approval five years ago was significant because the drug was rejected by the FDA three times between 1987 and 2005. Why? Previous management wanted to launch it for cosmetics.

“My interest was the fact that there had been a number of data sets generated on health volunteers without finding a medical home — and application.”

“Normally, you find a drug you know what it’s going to do. But you have to find patients — here we had 10 years of data, but no one knew how to use it. So that conundrum requires a contrarian approach where you started with safety and built it up.”

“So our strategy was to overcome the human objections by going to Europe first and addressing the US market last. It’s a number of events that led to this execution and this outcome.”