Hello and welcome. I'm Susannah Streeter. There are plenty of challenges ahead for the Global Pharmaceutical Industry, but today we're here to talk about Clinuvel. I'm very pleased to say the CEO, Philippe Wolgen, is with me now. Good morning. Welcome. Philippe, first of all, though, let's set the scene. We are in an era of high interest rates. That era of cheap money is behind us. This is a pretty tough time, would you say, for, you know, many industries, but including the pharmaceutical industry, certainly when it comes to raising money. Good morning. It's great to see you. It's a tough time for the sector in general. It's for the startups a very challenging time to raise money. The markets are shifting towards those companies that are late stage or revenue generating. It was somehow foreseen after the COVID pandemic, but we will all navigate through it. But it doesn't really pertain to what we do because we more or less anticipated the downturns in the markets. I'm happy to say that we've got the financial strength to navigate through it. Yes, so the cash pile built up- Yeah. - that will enable you to continue funding R&D, for example. Correct. And, in this sector, you really need to anticipate the oscillations in the market. And, we've been doing that since the GFC. The GFC was a real eye-opener of how we would change the management of these R&D processes, and that gives you the firepower to go through these unexpected downturns. So the Global Financial Crisis was a game changer. What have you done exactly to try and bolster your agility to deal with unexpected events? Well, it was a game changer in the sense that you understood that the negotiating power with the funds, with the institutional investors, was shifting towards those that were selecting the viable companies. And so we suffered in 2007 and 2008. We saw an enormous decline in value and woke up and said: Well, we need to change the way we manage our financials, and the best way to do it is really to anticipate the systemic shocks to the system. And from that moment on, we started to think differently about financing these projects. Because at the end, you are in project finance in order to get these drugs through the pipeline. So we are one of the very few in the world that actually stockpile the cash in order to gradually progress your programs. And there's pros and cons to that approach, but for shareholders, it at least safeguards that these companies are not seriously coming to the markets to raise money. Mm-hmm. Because the anticipation of running out of cash already depresses your share price. Now, you talk about shocks to the system. Yeah. Of course, we had another major shock with the war in Ukraine. To what extent has that, but also, heightened tensions between the U.S. and China, affected supply chains, for example, distribution? Has it had an impact on your company? Well, that's an excellent point because these externalities change the view you have on, for instance, life science supplies. And we always react to these events, but the writing was on the wall with the tension between China and Australia. And so we understood that the only way to mitigate these kind of risks is to get self-sufficient and to become sovereign. And that then calls, as the West has seen, for manufacturing and bringing in manufacturing back to the continent and being less dependent on China. And that's exactly congruent to our strategy. So the last part of the jigsaw in our company is really to bring in manufacturing in-house for that very reason. How would you say the perception of Big Pharma has changed over recent years? I mean, obviously, we had that really shift in attitudes during the COVID pandemic, when there was a real understanding- Yeah. - about the need for proper investment into the development- Yeah. - of new drugs and vaccines. But do you see the tide shifting again? Well, it was the industry was due for a correction, and COVID accentuated the need for new medicines and accelerated developments. And I think what Moderna, BioNTech did was amazing. Same for Pfizer, a nd the appreciation of the greater population came back to pharmaceuticals after years of negative and adverse headlines. So I believe that this is to stay for a while, and that the general population starts to understand the value of developing medications for them and serving novel products, yeah. And you're certainly grappling with that right now. For example, in the U.K., you're on the back foot when it comes to NICE have turned down approval for SCENESSE®. And actually, can you just explain the frustration that that has caused at your company and just how you're trying to gain the upper ground again? Well, that's a long story, and let's summarize this. The frustration is very much for the patients and the families, because these groups of patients that we treat are light intolerant. It's called porphyria. They can't go outdoors. They have an indoors existence, and for the first time, they have a medication that could be available to them. And, unfortunately, the gatekeepers are NICE, NHS England. And they are using a very stringent dogmatic system called the QALY- ICER system, where you need to demonstrate as a pharmaceutical, the cost-effectiveness of a product, a new drug. But that system in itself is scrutinized, is subject to much criticism by the industry, but also internally in the U.K., and questions raised in Parliament. We have been dealing, managing the NHS England for eight consecutive years. So we've come to a stage where we are actually going to call for judicial review and issue proceedings at the same time, because major errors have been made, and disadvantaging patients in the U.K. That is a stark contrast to other countries around us that have a much more, I would say, fair and equal system, where the patients get access to the drug under various conditions. The name of the game in the U.K. is very much that companies then eventually are asked to sign a confidentiality agreement, under which negotiations takes place to provide hefty rebates to NICE, NHS England. But you can understand this- Yeah. - given the fact that so many governments, particularly here in the U.K., are under a lot of pressure- Sure. When it comes to our budgets right now. Yeah. The NHS is struggling. They have to draw the line somewhere. Yes. And, this system has been set up to attempt- Yeah. - to get the greatest cost effectiveness out of companies. So, you know, you're pushing against a very strong tide here, aren't you? You're pushing against a strong tide, but, the analysis of these cases makes you believe that the system can be flexed, it can be altered. There has to be a willingness on both parties. So far, we've seen a very anxious NICE, presided by three people who are more or less petrified that the system will break under the pressure of one or several companies. But by and large, if you look at the European Union, there are systems that actually work quite well, where you can make agreements with pharmaceutical companies on volume, on risk-sharing agreements, without actually agreeing these ridiculous rebates. So you have had to take action in Germany as well, haven't you? Correct. It's not been plain sailing. No, it's not been plain sailing, but it is because we've managed to adhere to a Uniform Pricing Policy. And uniform pricing is not usual in industry. More usual is that you have differentiated pricing per country, and we believe that it would not be fair for the patients, for the insurers, and the physicians, because there's cross-border talk between all these parties. The insurers in Germany will speak to the insurers in Switzerland, and so forth. So once you understand that you do not want to create an arbitrage, you open your books, you show your audit accounts to the insurers, and then explain that the uniform pricing policy, based on fairness and equality, actually works in the European Union. And that's how we overcame Germany, because the arbitration board eventually said, "Well, this is a precedent. We haven't seen that before, but we fully accept your strategy." That was a landmark decision in 2017.