After a unnervingly long wait, Only Watch issued a detailed statement explaining its activities and financials in response to allegations on social media about financial improprieties.

While some of the allegations were unfounded, some were useful questions that had to be asked. Fortunately, the statement by Only Watch is not only comprehensive but also promises more to come (once the audited statements are prepared by KPMG Monaco in response to a recently promulgated law in the principality where Only Watch is based). More is certainly needed, but for now the response from Only Watch will quiet reasonable observers.

Initial thoughts

When the accusations about wrongdoings at Only Watch first emerged on social media, I was sceptical because by and large I believe in Only Watch (I even bought one of the Only Watch timepieces several years ago, albeit an inexpensive one).

That said, I could see why such questions came about. The event has become extremely high profile and its founder, Luc Pettavino, a celebrity seemingly dressed in over the top jackets all the time. This all unsurprisingly led to criticism. Still, the fundamental purpose of the auction felt like a genuine cause.

I did think some of the questions raised on social media were germane. I expected a swift response from Only Watch, but that took what seemed like a long, long time. Now the reply has arrived and it contains sufficient information that I am reassured, as I think most observers will be.

Amongst the notable facts is that Only Watch still retains about half the total amount raised to date, €50 million or so, in cash or equivalents to fund further research. Another is the fact that a large proportion of the funds contributed to research have gone to a company in which Mr Pettavino has a significant stake – but a company that has not paid nor will pay any dividends. More notably, the rest of the significant stakes are held by parents of children stricken with Duchenne muscular dystrophy (DMD), which certainly feels justified.

The reply from Only Watch, however, is not the final word. More information is required to quell the critics. Most obvious are the audited financial statements, which Only Watch has promised once they are done.

Even if the financials show that Only Watch is allowing its staff generous salaries or expenses, I think it is acceptable – as long as the financials are public.

A informative response

The genesis of Only Watch began with Luc Pettavino’s son, Paul, who was afflicted with DMD, which has no cure to date. A disease that strikes only boys, DMD beings at around four years old and leads to a life expectancy ending in the late 20s. Paul unfortunately already passed away from DMD.

Mr Pettavino founded Only Watch to raised money for research into a cure – the primary goal is not to aid current patients – and managed to raise almost €100 million over nine auctions. The statement by Only Watch contains several notable facts, including about the availability of its finances and the fate of the €100 million.

One of the most relevant criticisms of Only Watch was its lack of publicly available accounts. Interestingly, such accounts were only required to be submitted to the state in Monaco, where Only Watch is headquartered. That was the law until three weeks ago when Monaco issued a directive requiring charities with budgets of over €500,000 to issue publicly available financials.

The Patek Philippe ref. 6300A, responsible for about €32 million of the total raised to date

Half of that has been expended according to Only Watch, largely for the Phase 1 trials for a cure, with the balance retained for future research. Only Watch also issued a list of the beneficiaries of the funds it has disbursed over the last decade, the bulk of which went to two companies researching a cure.

One of those companies, SQY Therapeutics, was a focal point of criticism. This company received the bulk of funds from Only Watch to date, while Mr Pettavino and his daughter hold shares in it.

The organisation behind Only Watch owns 49% of SQY, while the remaining 51% is owned by parents of children with DMM or who had DMM (Mr Pettavino and his wife have about 15%). According to Only Watch, this ownership structure is to maximise the tax benefits provided by the French government to SQY.

According to the audited financials of SQY, the company carries a net loss of about €18.5 million to date (the 2022 financial statements show a €2.8 million loss with a modest €760,000 or so in salaries).

More importantly, the company has not and will not pay any dividends to its shareholders. Additionally, the company’s chairman states that “the terms of the shareholders’ agreement provide for inalienability and anti-dilution of shares, so as to eliminate any speculative logic on the part of shareholders”, which indicates the shares cannot be sold for profit.

The audited financial of Only Watch are on the way, and till then, some scepticism is warranted, but the details provided by the organisation so far are certainly reassuring.

Correction October 10, 2023: Luc Pettavino and his daughter hold shares in SQY, and not his wife as stated in an earlier version of the article.