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Clinuvel share price collapses 23% as investors retreat

With Clinuvel shares recently racing to and then falling from all-time highs, we take a look at what drove them there in the first place.

The price action at a glance

There are certain perks of flying close to the sun. For one, the views are apparently amazing.

Clinuvel Pharmaceuticals (ASX: CUV) experienced something similar, as its share price skyrocketed over 80% in less than a week on news that the US Food and Drug Administration (FDA) had approved a drug the company had spent years focusing on.

Investors scrambled to get their hands on Clinuvel stock, with the company crossing the A$45.880 per share mark at a rapid click. Days prior to this announcement it traded around the A$25 mark. Five years prior, it traded for just a couple of dollars.

There are of course, also downsides to such flights: following the peak of this ‘FDA-approval-mania’, Clinuvel has seen its stock fall steeply – likely as traders and investors take profits off the table.

All-up, its shares are now down some 23% since its euphoric October 9 peak.

Investors may have also realised that as important as FDA approval of any drug is – it’s not automatically a golden bridge to profitability.

Clinuvel share price: the story behind the run-up

What exactly does Clinuvel’s drug do?

In the simplest of terms, Clinuvel’s (ASX: CUV) ground-breaking, now FDA-approved drug has the ability to, 'increase pain free light exposure in adult patients with a history of phototoxic reactions from erythropoietic protoporphyria (EPP).’

The company describes EPP as 'an inherited metabolic disorder of the heme biosynthesis pathway which causes lifelong phototoxicity due to the accumulation and storage of the compound protoporphyrin IX (PPIX) in the blood and tissues.'

Clinuvel’s drug, as per the company’s own media announcement would reduce the impact of EPP so that patients could more safely be exposed to light. A remarkable feat by any standard.

Speaking to the next steps, Clinuvel’s Chief Executive Officer Dr Philippe Wolgen said:

'Our team is granted very little time to celebrate and now needs to shift its focus to facilitating drug product access for US EPP patients.'

Small comparisons

Though valuations likely didn’t factor much into the recent investor bullishness (and bearishness), for reference, Clinuvel Pharmaceuticals (ASX: CUV) currently trades significantly ahead of the ASX 200 benchmark, with a price-to-earnings ratio of 96 and a market capitalisation of A$1.77bn.

Nanosonics for comparison, an ASX-listed company also deeply focused on improving the lives of people through healthcare solutions, trades at a somewhat comparable valuation, having a market capitalisation of A$1.97bn on a price-to-earnings ratio of 144.7.

Such comparisons aside, with Clinuvel now achieving FDA approval on its EPP drug and the volatility levelling-off (somewhat, though its stock still declined today); it will be interesting to see where it’s share price heads next.

Watch this space, closely.

The Clinuvel share price currently sits at A$34.41 per share.

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