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Clinuvel: Sphene Capital Initiates Coverage With A Buy Rating

|Includes: CLVLF, Clinuvel Pharmaceuticals Ltd. ADR (CLVLY)


Sphene Capital, a research house with focus on small caps, has initiated coverage on Clinuvel Pharmaceuticals.

The unusually extensive report (58 pages) values the potential of indication EPP only with a DCF model at 31.70 AUD (25.66 USD) - an upside of >250% vs today.

Additional indications such as Vitiligo and central nervous system disorders are described as potential upsides, but not part of the valuation, indicating more upside.

For my taste, the valuation looks very solid and a lot of in-depth research has flown into this. Comparing this with my own valuation, resulting in a price target of 21-28 USD, we are in the same ballpark, with the following notable differences:

  • comparable revenue trajectory until 2021, then Sphene Capital assumes continued growth from EPP (non-US, non-Europe)
  • No valuation of Vitiligo potential (8-18 USD/share in my valuation)
  • more accurate representation of tax shield from historic losses
  • more accurate modeling of WACC (varying assumptions over time, taking cumulating cash pile and maturing company into account

Read the full study here:

The company will publish figures for the quarter ending Dec 31, 2017 tonight (Feb 1, 2018). The historic KPIs look as following:

Clinuvel Pharmaceuticals key KPIs, Source: Company quarterly reports, Visualization by the author

Disclosure: I am/we are long CLVLY.