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Why the Clinuvel share price has tripled in value in just 12 months

The best performer on the All Ordinaries over the last 12 months has been the Clinuvel Pharmaceuticals Limited (ASX: CUV) share price.

On Thursday the shares of biopharmaceutical company focused on developing drugs for the treatment of a range of severe skin disorders hit a new all-time high of $28.90.

At that point the Clinuvel share price had climbed a remarkable 217% since this time last year.

Why has the Clinuvel share price more than tripled in value in 12 months?

Investors have been fighting to get hold of Clinuvel’s shares due to the success and strong growth potential of its lead compound, SCENESSE.

SCENESSE is a first-line pharmaceutical product aimed at treating patients with the rare genetic disorder erythropoietic protoporphyria (EPP).

A few years ago the company made the strategic decision to self-distribute SCENESSE. This, and its decision to oversee and manage the supply chain and to build a network of accredited centres of porphyria expertise, has underpinned the company’s growth and helped it deliver an impressive half year result last month.

For the six months ended December 31, the company posted an interim net profit of $4.1 million, up 189% on the prior corresponding period.

The good news is that there’s still a long runway for growth ahead for the product. Notably in the U.S. market where the US Food and Drug Administration has granted a Priority Review for SCENESSE on July 8.

If it can satisfy the FDA’s requirements the drug could be on sale in the United States in the near future and provide an added boost to its sales.

As will the launch of other topical melanocortins for a range of diseases and conditions in the future. Management advised that its teams are currently building the framework to commercial success by addressing each part of the supply chain of this novel category.

Should you invest?

I think Clinuvel is a quality company and has a bright future ahead of it, but its shares do look a little expensive now after this stellar run. As a result, I would suggest investors take a look at industry peers CSL Limited (ASX: CSL) and Mayne Pharma Group Ltd (ASX: MYX).

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

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