Shares of Clinuvel Pharmaceuticals Limited (ASX: CUV) are trading nearly 3% up today with investors looking to the healthcare sector for value. Prior to the March market correction, Clinuvel’s share price was trading above $29 and are yet to regain these levels.
What does Clinuvel do?
Clinuvel has spent the last 15 years developing its product, Scenesse; the world’s first systematic photoprotective drug. Scenesse is used to treat Erythropoietic Protoporphyria (EPP) which is a metabolic genetic disorder causing intolerance to light.
EPP patients suffer painful reactions and burns from exposure to direct light, which means they must avoid it at all times. Reactions can occur after just a few minutes of exposure and last days or weeks. The disorder is rare, affecting around 10,000 people worldwide and causes social isolation and anxiety.
The Scenesse drug provides EPP patients with photoprotection and the ability to lead a “normal” life. Prior to the creation and regulatory approval of Scenesse in Europe in 2014 and the US in 2019, EPP had no approved treatment.
What does the Clinuvel share price represent?
Clinuvel has progressed from the R&D phase into the commercialisation phase with FY17 being the first year of commercial operations and the first profitable year. Its profits rose in FY18 and FY19, with the December 2019 period seeing Clinuvel eighth consecutive half-year profit. Its earnings per share increased from 18 cents in 2017 to above 30 cents in 2019.
Clinuvel paid its first dividends to shareholders in FY18 and FY19. The company is debt-free and has cash and equivalents of over $60 million. The share price has increased by around 700% over the last 5 years, taking Clinuvel into the S&P/ASX 200 (ASX: XJO) in June last year.
What’s next for Clinuvel?
Clinuvel hopes to specialise in creating treatments for rare genetic conditions. And beyond 2020 it is seeking to evolve into a diversified pharmaceutical company.
Clinuvel plans to take Scenesse to new regions to develop a paediatric formulation. A clinical trial is also underway to evaluate Scenesse for the treatment of vitiligo as a repigmentation agent.
Clinuvel has strong cash flow and an ambition to deliver new products which provide treatment to multiple patient groups. Investors with an eye on the Clinuvel share price will be interested to see if it can sustain long-term growth and evolve into an integrated biopharmaceutical company.
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Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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