The Clinuvel Pharmaceuticals Limited (ASX: CUV) share price has come under pressure following the release of an underwhelming full year result.
At the time of writing the biopharmaceutical company's shares are down 4% to $22.30.
What happened in FY 2020?
Clinuvel's strong growth came to a halt in FY 2020 after the coronavirus pandemic led to a slowdown in sales of its novel drug Scenesse.
Scenesse is used to increase pain-free light exposure in adult erythropoietic protoporphyria (EPP) patients with a history of phototoxicity. The company appears to believe that demand remained strong in FY 2020 despite lockdowns keeping people inside. Instead, it has blamed the softer sales on EPP sufferers being turned away from hospitals while they focused on COVID-19 sufferers.
Whatever the reason, after delivering an 11% increase in sales in the first half, its sales growth slowed markedly in the second. This led to Clinuvel reporting total revenue of $32.565 million, an increase of 4.8% or $1.5 million year on year. This is particularly disappointing given its launch in the massive United States market during the financial year.
Growing at a much quicker rate was Clinuvel's expenses. They increased by $6.4 million or ~44% to $20.8 million in FY 2020. Management explained that this was a deliberate and controlled increase. These costs relate to research and development, commercialisation, clinical studies, regulatory fees, and personnel.
Management commented: "The increase in overall expenditures reflects the Group's focus to further invest in its commercial rollout to treat patients in the EU and, for the first-time, the USA."
This ultimately led to Clinuvel reporting a net profit after tax of $16.65 million, down over 8% from FY 2019.
Management commentary.
Clinuvel's CFO, Darren Keamy, commented: "The Company has continued to meet its objectives to provide treatment despite the monumental societal changes which occurred in early 2020. While many healthcare facilities came to a standstill and focussed on critically ill COVID-19 patients, we managed to continue the supply of SCENESSE to EPP centres both in Europe and the USA."
"Today's results demonstrate not only an ability to maintain discipline in expenditure and cash management, but also a strength in managing our expenditure levels as a means to invest in future growth. In maintaining sufficient working capital to withstand adverse market conditions, and without further diluting shareholders or assuming debt, we have delivered a return on equity of 23 percent," he added.
No guidance has been given for the year ahead.
