Clinuvel Pharmaceuticals : Newsletter 3 - June 2021

Dear Shareholders, friends,

INTRODUCTION

During the lockdowns our team has had plenty of time to review our existentiae ratio; why is it that we address our thematics day in day out? Across the Group, we became immobile but yet connected by the cable of empathy we all feel for our patient populations, and furthering our work is the main motivator. For our Singaporean teams, the prospect of taking new products to markets, is shared as a unique and rare objective in a relatively young country. In EPP, we have found a population who have been housebound all their lives - call it a permanent lockdown. We all now realise the precise meaning of forced isolation. Part of our choosing new indications for melanocortins encapsulates the factor of clinical affinity.

In this News Communiqué III, we are reviewing some of the activities of CLINUVEL over the past 2 months. As per tradition, we provide commentary to macro events and deliberations as to how these may influence overall business.

The upswing in viral numbers in March and April has notably been a concern as parts of Europe went into third lock-down. Italy, Germany, France, Netherlands, and parts of Spain were affected, while the UK had announced long term measures to curtail the R-number (see earlier News Communiqués in 2020). While the state of Victoria in Australia is currently in third lock- down, we see the relaxation of measures in other parts of the world as indicative of growing confidence in the vaccination programs.

During recent News Communiqués, we shared our views on the probability of inflation and in particular, its impact on our sector. Since March, we are now facing real inflation and the question is how this rise in prices has emerged so swiftly. Expressed as Consumer Price Index (CPI), in February the US recorded 1.7% and in March 2.6% real increase in prices compared to the same period in 2020. On an annual basis, the Brookings Institute predicts an annualised increase of prices of 4.1%. I find myself asking the rhetorical question as discussed during the recent AGM of Berkshire Hathaway, openly posing 'why do we all accept rising prices at these times'. Equally in our

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sector, we see a disproportionate price increase in services, raw materials, and essential goods and supplies.

We think back at Yellen, the FED's Chairman under Obama, who set a target 2% inflation rate. While she has been a formidable force in monetary policy, one lesson to keep in mind is that many economists have been proven wrong when it comes to the depth of the current crisis, the rate of recovery, predictions of the markets and the swift rise in prices. While the US economy is growing, as well as the Eurozone's, the developed countries have benefited from the central injection of liquidity in the markets with the latest US$1.9 trillion stimulus package pushed through by the Biden Administration. It is one of the factors for a faster than anticipated rise in prices. However, consumer prices have risen disproportionately high, a trend which is also seen in healthcare and pharmaceuticals. Against the backdrop of rising pharmaceutical drug prices, we expand on CLINUVEL's position later in this Communiqué. Our suppliers have put through as much as a 20% increase, on supplies and services and this swell requires caution and foresight in financial management, whereby we continuously assess value for money and alternatives.

Overall, we foresee an upward adjustment of interest rates later this year or in 2022. The FED and central banks will be forced to intervene at this rate of recovery and economic expansion. The current reheating of our depressed economies is not a new phenomenon, the economic programs of Roosevelt and Obama both aimed at reinvigorating employment against the backdrop of inflation. The liquidity provided to society is already leading to a surge in new jobs and positions in Europe and US. While there is resistance from Powell and FOMC to touch interest rates, his UK counterpart Bailey has made public remarks that cutting below 0% would no longer stimulate the UK Economy; we await the Bank of England's decision as to whether rates can stay at 0.1% on 24 June.

Some key lessons from COVID are drawn as it impacts CLINUVEL. First the dependence and reactionary rethink of supply chains, the interconnected sector and reliance on key suppliers required our attention. Second, the revision of our processes to accommodate 'working from home' as a lasting phenomenon. We foresee that some of our offices will continue part-time working from home coupled with a regimen of two to three days in the office. This trend alone shifts our thinking about the necessity of expenditures towards central offices within business districts. Third, the future expansion of the Company to optimise innovation and distribution. As our economies become more automated and less reliant on human workforce, I also anticipate the introduction of AI and more expenses towards IT-led solutions and services. In life sciences, the rise of e-devices,self-reported outcomes through wearable technologies and medical solutions, may well apply to our particular business.

Amid all these changes, one is called for a calm demeanor to oversee the secular trends in the markets. We all realise that independence and value is secured by preservation of cash sufficient to withstand market swings when money becomes dear and equities start to correct, while shareholders benefit from consistency.

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One outstanding consequence of the pandemic is a greater appreciation for healthcare from administrations and the business community, whereby more focus is given to supply chains, prevention, and manufacturing. Moreover, the realisation that dependence on other surrounding nations in terms of health crises superimposes an additional risk on societies, we see how many nations are trying to provide for future health crises by establishing their own manufacturing facilities. CLINUVEL's expansion in manufacturing befits this global trend and as we progress our plans, we will follow periodically with news on this topic.

Centricity in Clinical and Personal Care

In our modern approach to patient care and personal care, we introduced a model which appears to deviate from the norm in pharmaceuticals and yet has worked well for us. Following the approach in many service industries and customer-focused enterprises, our emphasis and commitment is to remain in contact with the end-user on a long-term basis. The six-figure investments to establish systems and processes stems from CLINUVEL's approach to follow up and assist patients where needed. The entire company is operating under a virtual service agreement with our patients and medical community. Our universal care goes beyond the industrial mode. Our operations are geared towards actively finding healthcare providers, insurers, physical assistance, transport, and ensuring longitudinal safety reporting. All these facilities encompass what I see as the 21st century relationship with the medical end-user, the patient and general beneficiaries of our healthcare products.

This precarious approach to directly communicate with patients is bound by strict rules (General Data Protection Regulation) and follows internal training of selected professionals who monitor the adequate use of personal data through a databank, exclusively to be used for purposes related to the clinical assistance required. The repository of data is subject to external audits whereby other members of the Company do not gain access to ensure patients' confidentiality.

Under the European Regulation (EU) 2016/679 on the protection of personal data, there are clear boundaries of what a company is allowed to do with regard to patients' personal data. In addition, in respecting the Charter of Fundamental Rights of the European Union, one has to observe the right of protection of personal data as a fundamental right in its Article 8. It means that everyone has the right to protection of data concerning individuals and that processing must be fair, for specified purposes and on the basis of the consent of the person concerned. Another important part is that it gives people the right to access data concerning themselves and have incorrect information rectified. The latter does not apply when answering to their request to assist in insurance matters.

Many North-American organisations have had to make changes to comply with the GDPR, and also our US operations have had to adapt to the EU regulations, such as asking for explicit consent and revising user terms of agreement. In general, one can state that the same set of data protection rules apply across the EU.

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Shifting this theme to the entry of US data in CLINUVEL's Global EPP Disease Registry (GEDR), the transfer of cross-border data requires robust systems and oversight to manage the process of storage and analyses. The ultimate goal of these systems is for our teams together with EU and US regulators, to be able surveil the safety of

SCENESSE® in the long term. We are at a position whereby both systems are functioning well and well accepted by EMA and FDA. From an investment point of view, it has been worthwhile for the company to manage these systems itself contrary to the usual outsourcing of these services.

Recent discussions with US institutional investors revolved around CLINUVEL's approach to its clinical program, the role of patients and patient organisations. Although in these discussions we cannot disclose more information than what is in the public domain, we share here a general summary on CLINUVEL's main strategy on centricity of diseases states:

1. Emphasis on patients but also their immediate families
2. Decisions taken based on feedback from patient communities and
3. Genuine demand for treatment/product without solicitation or intervention of the Company,whereby we prioritise patients who have:
4. 1. been "forgotten, neglected", untreated (unmet clinical needs);
   2. lack of alternative treatment (lack of comparable); and
   3. show similarity in disease states and behaviour cross-border (uniformity).

The question is whether each pharmaceutical company is acting towards these objectives, and our analysts and institutional investors drew first conclusions that CUV as an organisation distinguishes itself from others in its centricity.

General Operations

I see the CUV business model best explained in terms of Indra's net, a Buddhist concept where interconnectedness plays a big part of the construct. Most decisions taken by our

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managers are interdependent and are seldom a direction or position taken in isolation. As part of this view of interdependence, all our managers are therefore cross-functional and involved in more than their core specialty or background; with that comes integration from the day they join the group. And to introduce the obvious paradox, at the same time we ask there to be a degree of disconnection from possible cognitive biases, to arrive at sound and sometimes unpopular decisions. In the evaluation of the Company, we wish to see our teams communicate not only the outcomes and data, but - within the boundaries of disclosure ability - also why our managers take certain directional choices.

As a further quick note to our four divisions, statistically most corporate mergers fail to integrate the acquired company. Therefore, our current mode to continue building from within is a safer remedy to render the group competitive.

On 12 April, we released our Strategic Update IIto which the feedback on content and format has been positive. Here, we had chosen to answer some of the questions relating to corporate choices and strategy. Whereas traditionally, pharma and biotech companies provide news as it occurs, our Communications, Branding and Marketing (CBM) team initiated a new format of providing shareholder updates by not only focusing on progress, but also on explanations and criteria chosen to grow and expand the Company. We will continue this series in Strategic Update III, planned for October.

On 29 April, we released the Group's quarterly financials (ending 31 March). As iterated, due to the gyrations in receipts one cannot provide a real-time snapshot on supply of our lead product, but it does provide a general idea of commercial operations. We continue to provide these quarterly statements as a courtesy to our long-term shareholders.

As to the financial management of the Company, we received specific questions how CUV intends to manage the Company if a downturn in the markets eventually unfolds. One cannot claim to predict the direction markets will take; however, we do frequently adjust our variable costs taking into account cyclical corrections evoked by unexpected events, whereby each macro event is often characterised as 'unexpected'.

While financial decisions are frequently and routinely made among Board and Executive Management, we can openly speak to the issue of leverage. Highly geared companies in markets of low conjuncture tend to be more vulnerable, there is nothing new here. However, actors in high-risk industries tend to underestimate the compounded effect of market corrections, as the institutional reactions often lead to retreat from equities. With small to mid- cap companies the first to experience the on-market redemptions, one needs to realise that current success does not make one insusceptible to these cataclysms. The cumulative spiral of financial distress in pharmaceuticals often originates from debt burden, service levels and need to enter refinance deals when conditions have unexpectedly turned against the issuer. Hence, experience through various economic cycles has driven the need to steer CLINUVEL away from the fringes or zones of financial peril, and the influence we can have over debt, cost effectiveness and rate of investments. Eventually, we are called to manage a company with the view to achieve