Shares in Clinuvel Pharmaceuticals Limited (ASX: CUV) were down as much as 21% today to be one of the worst performers on the ASX 200.
Shares have recovered somewhat but are still down 8% at the time of writing.
What Happened?
The decline in Clinuvel shares is likely the result of profit taking after yesterday’s huge jump. This was in response to the company receiving FDA approval for its SCENESSE product for the treatment of erythropoietic protoporphyria (EPP) in adults.
The Clinuvel share price was up as much as 63% yesterday before closing 60% higher on the day. This was a truly remarkable rise and it’s little wonder that some shareholders have decided to take some of their profits off the table.
As SCENESSE is the only drug with FDA approval for the treatment of the rare disorder, it is likely that Clinuvel will receive a large boost to revenue going forward.
Is The Pullback A Buying Opportunity?
Breaking into the U.S market is a massive milestone for Clinuvel and no doubt adds significant value to the share price. SCENESSE is already proving to be successful in Europe, where it has been approved for use for a number of years already.
Clinuvel reported $31 million in revenue in FY19 and a before tax profit of $18.1 million, illustrating the huge growth margins attainable from selling its exclusive product.
Estimating future revenue inclusive of this latest news is a very difficult task, which makes estimating a valuation for Clinuvel’s shares a tough assignment.
As a result, I will remain on the sidelines for now, but will be very interested to see if management come out soon with any guidance regarding exactly how they intend to commercialise the product and ramp up sales.
There are a number of other healthcare shares you might be interested to take a look at such as Cochlear Limited (ASX: COH) and Ramsay Health Care Limited (ASX: RHC), both of which are proven performers that pay a reliable dividend.
For other proven, dividend-paying shares, check out the companies profiled in the free report below.
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At the time of publishing, Luke has no financial interest in any companies mentioned.