Today we discuss a stock which has taken a winding path to get to here from its early days, with a share price that reflects that volatile journey such has been the path of Clinuvel Pharmaceuticals (ASX:CUV) who are experts in melanocortin (small protein hormones) chemistry and biology.
CUV first started its journey listed as Epitan - which at the time sought approval for a chemically induced ‘fake’ tan. It was renamed in 2006 as CUV. Initially the solution was knocked back by the FDA, but in 2005 when an Australian team licenced the molecule, they set about maximising the medicinal benefits of the significant improvement in sunlight tolerability that the molecule delivered in testing to its subjects.
This led the researchers down the path of the rare skin intolerance condition erythropoietic protoporphyria (EPP), a rare metabolic disorder that causes painful photosensitivity to both natural and in some cases artificial light. Further it can lead to liver disease and gallbladder dysfunction. I will stop with the medical science there (there is a lot more on the company’s website, within their reports and on Google if you are interested.)
But the outcome of all this is development of the peptide afamelanotide which is sold to market as “Scenesse” and is used on adults who suffer EPP. I mentioned the disease was rare. In fact the drug has only been administered some 14,500 times over the past 17 years globally. According to the company's website,1400 individuals globally have received Scenesse. The drug can cost between $90,000 - $140,000 though many governments subsidise the treatment for those that suffer from the terrible affliction.
The sales of Scenesse have supported the business for some time as it goes about its R&D work which is quite significant (and we will discuss in more detail within the outlook section) and despite the small cohort, the earnings performance have reflected the difference they have made to its patients. But as alluded to in the introduction, the price has had a wild time of late falling ~60% from its peak in September 2021. So one asks, is CUV ready to step out into the light once more?
Quality
CUV is highly profitable achieving a consistent operating profit margin of above 50% in the last few…
