The Clinuvel Pharmaceuticals Limited (ASX: CUV) share price has been the worst performer on the ASX 200 index by some distance on Thursday.
In morning trade the biopharmaceutical company’s shares crashed as much as 21% lower to $35.45. Its shares have since rebounded slightly but are still down 11% at the time of writing.
Why is the Clinuvel share price crashing lower today?
Today’s decline appears to have been driven by profit taking from some investors following an incredible rise on Wednesday.
Clinuvel’s share price rocketed over 60% to an all-time high of $45.88 after the U.S. FDA approved its SCENESSE product for the treatment of erythropoietic protoporphyria (EPP) in adults.
This is expected to be a major boost to its revenue as no other treatment has approval in the United States market.
What is SCENESSE?
SCENESSE is a first-line pharmaceutical product aimed at treating patients with the rare genetic disorder EPP.
EPP is a rare life-long genetic disease found mainly in fair-skinned people. Sufferers will often have a severe phototoxicity of the skin, resulting in intolerable swelling and scarring when exposed to light. Reactions can vary from mild to extreme, with hospitalisation and powerful pain killers required for the worst cases.
The product has been a huge success in Europe and has been generating strong revenues in the market in recent years. For example, in FY 2019 Clinuvel reported an impressive 22% lift in revenue to $31.05 million. And on the bottom line things were even better. It posted a 40% jump in profit before tax to $18.1 million over the 12 months.
So, with the company now able to sell its product in the massive U.S. market, it looks well-placed to deliver further strong top line and bottom line growth in FY 2020.
But whether that growth will be enough to justify its current market capitalisation of ~$2 billion, is hard to say. As a result, I commend the company on this fantastic achievement, but I’m going to watch on from the sidelines.
For now, I would be a buyer of fellow healthcare shares CSL Limited (ASX: CSL) and ResMed Inc. (ASX: RMD) ahead of it.
The post Why the Clinuvel share price dropped 21% today appeared first on Motley Fool Australia.
Alternatively, these hot growth stocks could be worth a look. I believe they have what it takes to outperform Clinuvel in 2020.
You’re invited! For a limited time, The Motley Fool Australia is giving away an urgent new investment report detailing our 3 TOP BLUE CHIP SHARES to own in 2019.
So if you like trustworthy, stable, high-performing companies that pay fat fully franked dividends – we’ve got you covered!
Stock #1 is a beloved old Australian company turning its attention to high-margin businesses... and rapidly returning cash to shareholders with its hefty dividend...
While Stock #2 is an online powerhouse that’s rapidly gaining market share all around the globe... poised for years (or even decades) of tremendous growth...
Even better, Stock #3 offers a whopping 6.5% grossed-up dividend! Which beats the rates on term deposits right out of the water – and offers the potential for capital gains, too.
You can discover all three shares inside our new report right now. To scoop up your FREE copy, simply click the link below right now. But you will want to hurry – this free report is available for a LIMITED TIME ONLY!
- NEW: Free report names top 3 ASX dividend shares to buy for 2019
- Top analysts name their top 3 ASX blue chip shares for 2019
- 3 quality dividend shares to boost your income
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended ResMed Inc. 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.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019