Why did this ASX 200 healthcare share rocket 16% today?

Clinuvel Pharmaceuticals had a cracking day on the market on the back of its FY22 results.

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Key points

  • The Clinuvel share price closed more than 16% higher on Wednesday
  • The ASX-listed biopharmaceuticals company released a strong set of FY22 results yesterday
  • A broker has now upgraded its share price target from $31.40 to $36.90 a share

The Clinuvel Pharmaceuticals Limited (ASX: CUV) share price gained 16% today after the company released a strong set of results for FY22.

Shares in the ASX-biotech company went into overdrive today, finishing 16.19% higher at $20.17 a share after hitting an intraday high of $20.43 each.

Let's see what all the fuss was about.

What did Clinuvel report for FY22?

Here is a brief snapshot of the key highlights from the company's FY22 results.

  • Revenue jumped 37% to $65.7 million
  • Profit before income tax rose 33% to $34.3 million
  • Net profit after tax (NPAT) went backwards by 16% to $20.9 million
  • A fully franked final dividend of 4 cents per share was declared

Clinuvel develops drugs for the treatment of genetic and vascular disorders and makes most of its revenue in Europe and the USA. Its core product is SCENESSE, a drug for erythropoietic protoporphyria, an inherited condition that causes acute and painful sensitivity to light.

SCENESSE was the primary revenue driver with its sales increasing 40.8% to $60 million, in particular in the US.

The significant increase in income tax from $0.98 million in FY21 to $13.4 million in FY22 was the main reason for the decline in net profit after tax, the company said.

Personnel-related costs, share-based payments, and materials expenses also contributed to the fall in the bottom line. Share-based payments rose from $2.6 million in FY21 to $6.1 million in FY22.

Operating cash flows jumped from $19.2 million in FY21 to $39.9 million in FY22. After deducting payments for property and plant and equipment, free cash flow improved from $18.4 million in FY21 to $39.4 million in FY22.

The record date for determining entitlements for the final dividend is 7 September. It is due to be paid on 21 September.

What else happened in FY22?

In March, the Clinuvel share price shot up on the back of a positive update on a stroke treatment pilot study, as covered by my colleague James Mickleboro.

The study revealed that Clinuvel's drug had no adverse side effects in stroke patients by day eight over a 42-day study period.

In May, Clinuvel then recorded positive results by the end of the trial where Clinuvel's drug afamelanotide was deemed safe in treating mild to moderate arterial ischaemic stroke.

Such results demonstrate the potential optionality of Clinuvel's treatments, the company said.

What did management say?

Clinuvel's chief financial officer Darren Keamy said:

CLINUVEL's commercial operations are scaling up to meet treatment demand worldwide, while the Group is pursuing R&D projects which aim to add value over the long-term. Our FY2022 results show a fundamentally strong business to date, allowing us to invest for future growth. Improved cash inflows this year have further bolstered the Company's cash reserves enabling us to continue the implementation of a growth strategy in the face of difficult economic headwinds. The strong cash position has also allowed the Board to declare an increase in dividend this year, most of all recognising the loyalty and patience of long-term shareholders. We remain focused to translate our technology to the benefit of patients and specialised populations, particularly those at highest risk of light-induced damage and skin cancer.

Given Clinuvel currently has $121.5 million in cash with no long-term debt, I can see why Keamy is optimistic about the company's future outlook.

What's next for Clinuvel?

Management is planning to reinvest a large chunk of its capital into new development. In FY22, Clinuvel reinvested more than 49% of its revenue in R&D, new specialised staff, and production.

The biopharmaceutical company has committed to spending $175 million over the five years to 30 June 2025 to execute its growth and expansion plans. Management says is on track based on prior expenditure levels in FY21 and FY22.

Clinuvel share price upgraded by broker

Broker Jefferies upgraded its Clinuvel share price target from $31.40 per share to $36.90 per share, maintaining a 'buy' rating. Jefferies sees big market potential for its erythropoietic protoporphyria drug because it believes there are no competitors. However, it also sees increased competition over the medium term.

Clinuvel share price snapshot

The Clinuvel share price has suffered a similar fate as many other ASX growth stocks. The company's shares fell by 47% across the last year but have recorded a 10% rise in just the past week.

Meantime, the S&P/ASX 200 Index (ASX: XJO) has been more steady with a fall of 7% over the past year and a drop of 0.16% in the last month.

Clinuvel has a current market capitalisation of around $995 million.

Its current price-to-earnings multiple is around 42.78 times.

Motley Fool contributor Raymond Jang has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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