Clinuvel Pharmaceuticals Limited 

CUV Details

Key Takeaways from FY21: Clinuvel Pharmaceuticals Limited (ASX: CUV) is engaged in developing drugs to treat a broad range of severe skin illnesses. 

• Increase in Revenues: The company reported FY21 revenues of ~$48.45 million, depicting a rise of ~43% on a year over year basis, owing to higher sales from commercial operations in the European economic area and strong demand for treatment in the USA.
• Rise in Net Profit After Tax: The NPAT increased a whopping ~64% YoY and came in at ~$24.7 million, representing CUV’s fifth consecutive net profit in FY21. The Basic EPS stood at $0.50, depicting an increase of ~64% on pcp.
• Expenditures & Reinvestment: During FY21, total expenditures stood at $22.7 million, up 2% YoY due to the rise in manufacturing and supply costs of raw materials.
• Increase in Cash Receipts: In FY21, the company reported cash receipts of $38.723 million, up 32% year over year. The rise in cash receipt was primarily due to the higher distribution of SCENESSE® in Europe and the USA for adult patients suffering from EPP.
• Increase in Cash Balance: The company exited FY21 with a cash balance amounting to $82.69 million, up from $66.74 million reported as of 30 June 2020.
• Rise in Cashflow from Operations: Operating cash inflows in FY21 came in at ~$19.26 million, an improvement from cash inflows of $14.91 million reported in FY20. 

Revenues Highlights; Analysis by Kalkine Group 

Risk Analysis:  

• Forex Headwinds:Any adverse movement in foreign exchange price may impact the financial performance of the company.
• Failure of Clinical Trials: The clinical trial process is designed to assess the safety and efficacy of a medical device before commercialisation. A failure to achieve the desired results may hamper the company’s financial

Outlook: CUV remains on track to expand the therapeutic potential of melanocortins and SCENESSE® in numerous genetic, metabolic, and life-warning disorders. Notably, the company remains viable to build a sustainable business, thereby generating positive cash flow and profit and a decent liquidity position and cash reserves. 

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative) 

Source: Analysis by Kalkine Group 

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation: The stock of the company went up by ~17.82% in the past three months. Currently, the stock has a 52-week high and low level of $40.96 and $19.53, respectively. On technical analysis front, the stock of the company has a support level of ~A$36.00 and a resistance level at ~A$49.59. The stock has been valued using the Enterprise Value to Sales multiple-based illustrative relative valuation method and arrived at a target price with a correction of mid-single-digit (in % terms). The company might trade at a slight premium than its peers’ average considering decent FY21 financial performance, continued distribution of SCENESSE® in the US & Europe, and SCENESSE® approvals for new markets in FY21. For the purpose of valuation, peers such as Kazia Therapeutics Limited (ASX: KZA), Mesoblast Limited (ASX: MSB), Telix Pharmaceuticals Ltd (ASX: TLX), and others have been considered. Considering higher demand from its key product SCENESSE®, robust FY21 performance, encouraging long-term outlook, geographical diversification, current trading levels, and valuation, we recommend investors to book profit and give a “Sell” rating on the stock at the current market price of $40.920, as on 3 September 2021, 2:40 PM (GMT+10), Sydney, Eastern Australia.

CUV Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.  

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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