Have you heard of Clinuvel Ltd (ASX: CUV)? The skin disorder company is famous in Germany and Australia. Clinuvel captivated investors in 2019 with an impressive 150% surge, leading to their high of $45 in October. However, CUV decreased 43% since its $45 high. Today we will discuss why Clinuvel’s plummet is an opportunity, what CUV’s 2020 calendar has in store, and whether the company is worth investing in?
Why is Clinuvel down 10% in 2020?
It can be hard to wrap your head around how a company skyrockets by 150% but is now trading at a 43% decrease. Clinuvel’s start to 2020, is a 10% drop, added to the confusion. Why is Clinuvel, a biotech with FDA approval, healthy financials and a promising future down?
The sudden decrease represents short term investors cashing out. Short term investors wait for a massive news announcement and sell the day of to make a profit. In the case of Clinuvel, their drug SCENSSE received FDA approval on 9th October. Causing, short term investors to sell CUV’s to profit off the volcanic surge to $45. Resulting in the 43% plummet.
However, as CUV increases their market sales of SCENSSE gradual growth should pick up. Thus, it is understandable holders of CUV are frustrated, however, the decrease is not concerning.
Clinuvels 2020 outlook
- US market – Part of North America Campaign
FDA approval on SCENESSE kickstarted CUV’s campaign in the US. Clinuvel is bolstering their reputation in the US through both the political and medical landscape
CUV requested a Guidance meeting, 10Th Feb 2020, with the FDA on how to design their phase 2b vitiligo clinical study. Vitiligo is a disease which causes the skin to become pale and results in white patches, affecting darker skin patients.
Currently, there are no drugs approved for vitiligo in the US. Providing CUV with an opportunity to become a market leader in Vitiligo and consolidate their reputation with the FDA.
Also, Clinuvel differentiates itself from other pharmaceuticals by pricing its drug at a fair price to accommodate the budget of patients worldwide. With 2020 elections approaching CUV’s pricing policy is aligned with the people of America. Which is great, as CUV is just entering the US now.
- Australian Market
With CUV being an Australian company, the business looks to continue to expand its profile in Australia. On the 23rd December CUV applied to the “TGA for SCENESSE to be registered in the Australian Register of Therapeutic Goods (ARTG). If registered SCENESSE will become available by prescription in Australia”, and thus increase revenue.
Last week, on the 3rd Feb, the TGA announced the acceptance of the registration for review. TGA will evaluate until satisfied. Making 2020 an exciting year for CUV’s Australian campaign.
- Half yearly report = 28th February 2020
- Quarterly cash flow report = 30th April 2020
- Quarterly Cash Flow Report = 31st July 2020
- Full year results = 31st August 2020
- Quarterly cash flow report = 31st October 2020
Is CUV worth the investment?
Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area
CUV’s story is nothing short of remarkable. Clinuvels impressive 2019 financials speak volumes to the ASX and global biotech industry. A 37% increase in profit over 2019 FY and a ROE of 32% (20% higher than the industry average).
Moreover, CUV’s US and Australian campaigns made significant progress in 2019 and look to continue throughout 2020.
Personally, I like the look of CUV as an investment. The company pays a dividend, which is unheard of for a biotech. Also, CUV reported their best financials in 2019 and with only good news surrounding the company the half-yearly results on the 28th Feb look promising. I’m sure most investors will look to snap of the opportunity to purchase CUV shares in the future. However, your own research is required.
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The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Patrick McLoughlin, Associate of YIG