Clinuvel Pharmaceuticals : Newsletter 4 - August 2021

Dear Shareholders, Friends,

INTRODUCTION

With satisfaction, we look back at an eventful interval since we last communicated with you in News Communiqué III. Much progress was made on the pre-clinical, clinical, and commercial side of the Group.

On 29 July, we shared our quarterly cash flow performance (April to June) and the results were better than expected, given the restricted access to European hospitals who are still not working to full capacity

This News Communiqué IV concentrates on a number of specific topics.

In this Communiqué IV, I also wish to delve into a recent question posed by a long-term a Swiss asset manager who quizzed the Company's emphasis on safety and, particularly, why this appeared to be of such importance. We shall discuss this item in more detail as it directly links clinical to shareholder value.

Against these macro issues, sad news reached us about the most prominent and longest serving sector analyst, David Blake of Bioshares. David started Bioshares Analyses in 1998 with Mark Pachacz, and both are the most committed analysts of the sector in the Asia-Pacific.

Recently, David has suffered severe health issues, and I call all of you who have met David to send him your thoughts and well wishes. He is a formidable man, conscientious, knowledgeable and with a deep interest for our sector. Without David Blake and Mark Pachacz leading Bioshares, many companies would not have received attention and visibility in the sector and consequently, had the ability to raise finance and develop products for patients.

David is influential to CLINUVEL's course and strategy, and has been a key party to our successes to date. While he had been critical of Epitan at the turn of the century, he motivated me to pick up the battle to get the drug to patients. He has rightly predicted CLINUVEL timelines, the seeding stage, the harvesting stage, and the expansion stage, where we are at present. Without the weekly publications of Bioshares and periodic input from David and

Mark, we would not have had deeper insights on the failings, faux-pas and success stories of other companies, the dos and don'ts in the Asia-Pacific region.

It is unfathomable to see David on the receiving end of healthcare after spending three decades analysing and following the companies. The CLINUVEL team sends its love and affection to David's family, Sonya and Alethea. We continue to send our prayers, wishes and energy to a great Australian man, who has much to contribute to our sector.

FINANCIAL YEAR ENDED 30 JUNE 2021

Our prudent and thorough approach to managing the business' financial household has been a constant factor over the years. The energy put into the systems, processes and controls are the foundation of our financial team and their ability to execute a global commercial program. Today's results are the best the Group has ever recorded and are based on years of preparation and discipline to navigate to a peer leading financial dashboard.

Today's dials show, for FY2021, a 43% increase in total revenues to

A$48.451 million. While a steep increase in expenses of 56% was already seen in FY2020, enabling us to keep a stable rate of expenses and reinvestments, we contained the increase in our expenses this year to 2%. Reinvestments occurred in new systems, technologies, new peptides, and manufacturing processes, while we grew our talent bases quite aggressively. Cost of integration during rapid expansion is not expressed financially, nevertheless a real factor.

FY2021 saw an increase in the number of treatment centres providing access to patients, the absolute number of patients receiving treatment, and the number of new patients seeking SCENESSE® (afamelanotide 16mg). The number of implant administrations rose, as well as the average number of implants per patient. This translated to a record net profit after income tax of A$24.728 million, an increase of 64% compared to the previous financial year.

These results show that annual predictions can be fruitless: our own internal anticipation had been lower, given the prolonged pandemic restrictions and uncertainty. The market conditions have been overcome by our teams creating novel avenues, working with decision makers, and taking the treatment access closer to patients. Under the UK team's guidance, physicians, representatives, and national competent authorities were engaged in weekly conversations to find solutions for patients.

The priorities given to the business directly translate to profitability and hence total shareholder returns, for FY2021 recorded 28%.

Earnings per share continued to rise to A$0.50, while appreciation for shareholders are returned in the form of a modest dividend.

CLINUVEL'S EMPHASIS ON SAFETY

At the time of this piece going live, we are nearing a significant moment in time of having administered 10,000 implants of afamelanotide to various

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What is the underlying reason CLINUVEL distinguishes itself from other companies in stressing the importance of safety of afamelanotide, a novel hormone introduced medical use?

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patient populations over the course of 16 years. The hormonal treatment translates to 70,000 drug exposure days with a remarkable stable and benign profile of adverse events (side effects). The most common side effects seen after SCENESSE® administration remain headaches and nausea the first 24 to 48 hours, fatigue, gastrointestinal discomfort, flushing and localised reactions at the implantation site.1 Generally speaking, the most credible and valuable testimonies on a drug's safety comes from patients themselves, reporting the adverse events experienced spontaneously, or through their physicians or national medicines reporting systems. Sixteen years onwards, afamelanotide's safety profile remains consistent as the database of long-term drug users demanding treatment year on year continues to grow.

Our frequent communication on safety of afamelanotide over the years requires an enumerated narrative. What is the underlying reason CLINUVEL distinguishes itself from other companies in stressing the importance of safety of afamelanotide, a novel hormone introduced medical use?

As the CLINUVEL case is being written by Columbia University (intended publication late 2022), there is a chronological course of events providing insight to the longitudinal attention to safety. As our teams had been asked by regulatory authorities to scrutinise the safety of the product beyond reasonable doubt, this attention would actually become one of our strongest arguments to decision makers, regulatory reviewers, insurers, and the medical community. The profile of afamelanotide and variety of diseased populations addressed would give us a competitive advantage over any other company developing an MC1R and MC4R agonist (drugs binding and activating melanocortin receptors 1-4).

In introducing a novel hormone for human use, we faced resistance from regulatory agencies worldwide repetitively questioning the Company's 'true' intended use of the product. As several previous management teams had publicly announced plans to make afamelanotide available for the wider tanning market, CLINUVEL was thought to follow the same track. With the history carved in the minds of decision makers, regulatory reviewers of global agencies had refuted the possibility of pharmaceutical biomimicry triggered by effects of UV to skin, causing melanogenesis (darkening and body tanning). In plain English, the use of a systemic hormone to trigger a protective skin response was frequently rejected in scientific meetings on the basis of concerns of safety. And even today, our teams occasionally face stiff rejection of the medical concept, albeit the safety profile of SCENESSE® is now acknowledged as remarkably consistent and positive.

Parallel, in these days, the world woke up to more than 100 rogue laboratories emerging from Middle America to Europe and Asia, distributing the rogue "Melanotan I and II" products online, targeting consumers desiring to self-inject. It was apparent within the regulatory environment that these illegally synthesised products posed a danger to public safety.

The fulcrum of tension came unexpectedly in the middle of the European Medicines Agency (EMA) review of afamelanotide when 75 labs within the European Union were uncovered distributing "Melanotan I and II" as unapproved substances. As we tested these substances for high impurities,

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At some point the suggestion was made that CLINUVEL was allegedly suspected of actually being one of the rogue laboratories distributing unregulated illegal substances.

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the chemical profile resembled peptide-like molecules, but not afamelanotide. However, as the market of self-tanning chemicals grew, regulatory bodies and national competent authorities grew more hostile to the pharmaceutical concept of photoprotection.

Now, a decade later as the dust has settled, we can state that at some point the suggestion was made that CLINUVEL was allegedly suspected of actually being one of the rogue laboratories distributing unregulated illegal substances. It was a sublime attempt - without grounds or evidence - and the doubts subsided as substantiated claims could not be maintained. It demonstrated that impressions and perceptions can actually rule a room of rational decision makers.

With scientific evidence, the consistency of public messaging and a history of integrity, our team managed to eventually conclude the case that CLINUVEL had no involvement or business in flogging illegal chemicals to consumers in EU, US, or Australian markets.

Adding to the prodigious chagrin, from 2005 to 2011 we witnessed parts of the medical community openly raise doubts whether afamelanotide should be used at all, and which side effects could be expected over the long run.

During medical conferences, some scientists - without actually having evidence or real-life experience in using the drug product - would take to the microphone suggesting to the room that afamelanotide would not prove safe in the long run. Their main concern had been the drug's ability to darken pre-existing sunspots (nevi), despite a growing body of scientific evidence pointing to the contrary effect: the hormone could actually photoprotect and guard the dermal and epidermal cells. Some reports would go as far as not being able to distinguish between rogue chemicals and the regulated drug afamelanotide, confusing the two.

All these global events surrounding melanocortins would naturally have an impact on the impression of scientists and reviewers at EMA, Australia's TGA and the US FDA, who received affirmation of unfounded biases. However, our scientific and clinical data and arguments held at the end.

Now, a decade on, we take it upon ourselves to monitor patients life long. As time has passed, we have come to understand that binding to the MC1 and 4 receptors could theoretically be achieved by many agents, such as forskolin, prostaglandins and synthetic molecules. However, since all these substances differ in structure from the biological alpha-melanocortin stimulating hormone (α-MSH),long-term (>10 year) safety in large populations will need to be proven at the risk of starting non-physiological processes. CLINUVEL has gone down that long and dark lane, while it chose to work with an analogue of the natural α-MSH. Now, our teams have 70,000 exposure days to analyse and balance any future discussion, if any.

A Swiss financier asked me whether this process could have been completed earlier or faster, and the answer is negative. CLINUVEL had to overcome these legacy issues, proving afamelanotide's safety beyond reasonable doubt to silence the most resistant regulatory reviewers and clinicians. As the contrast could not be bigger, our pharmacovigilance and quality teams are now applauded for their industrial approach; in

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This perpetual emphasis on safety allows us to translate melanocortins to other indications, other formulations and even OTC products.

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pharmaceuticals, one can be confident without ever being able to rest on their laurels.

In a few days, we will have administered the 10,000th implant dose, as we enter the fifth consecutive year of "use under real world conditions". This moment is one to cherish, given the background I provided you today. We had a plan, and we executed. This perpetual emphasis on safety allows us to translate melanocortins to other indications, other formulations and even OTC products.

In conclusion, the establishment of an integrated, in-house specialised team monitoring clinical safety, building systems and analysing live fed data daily had initially been borne out of defence; now, this approach has become an asset of the Company. The best way I can summarise our work is: "the safety efforts have costed a seven digit number,but preserved the Company's nine figure valuation,without which patients would never have had the treatment".

US UPDATE (Dr Linda Teng)

The US team continues to pave uncharted territory by identifying, evaluating, and training US EPP Specialty Centers as new clusters of EPP patients are engaged throughout the United States. With trained and accredited EPP Centers spread out nationwide, most EPP patients are receiving treatments with their local EPP Centers. In addition, the roll-out of US Centers has increased awareness of the EPP disease in both private and academic sectors of the US medical community. We hope that the ongoing awareness of EPP from US physicians and Centers will allow patients who were misdiagnosed or undiagnosed to have access to proper medical care and treatment. The expansion of US Centers has resulted in a continuous increase of EPP patients signing up for the EPP registry. The US team implements longitudinal care to new and current EPP patients by providing assistance and guidance to their local EPP Centers. In parallel, the US team maintains active interactions with EPP providers via telephone and email, and publishes quarterly clinical newsletters to US EPP Centers.

The COVID-19 pandemic has caused upheaval in the US healthcare industry. The lifting of restrictions and reopening the economy by individual States has resulted in a surge of backlog on medical appointments and procedures as hospitals rush to implement ramp-up strategies and address staffing shortages. This has also impacted the EPP patients' treatment schedules. A number of EPP patients have reached out to the US team and expressed their challenges in not being able to schedule their first and/or subsequent visits with their EPP providers for the next 2-3 months. The close relationship with the EPP Centers enabled the US team to assist the EPP patients by bypassing the standard appointment system and successfully schedule timely first and/or treatment visits.

The US team has been the backbone in supporting and liaising between the US Centers and EPP patients on Center referrals, Prior Authorization (PA) submissions, benefits and claims management, and any administrative assistance the Centers may need to ensure the EPP patients receive timely treatment. The recent new HCPCS Level II J-code (J7352) for SCENESSE® as

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The US team is humbled to work with and for a wonderful group of US EPP patients

CLINUVEL Communiqué IV 26 August 2021