CSL Ltd (ASX: CSL) is a global company that develops and manufactures biopharmaceutical products mainly derived from blood plasma. It also develops and manufactures influenza vaccines. CSL’s key markets are the United States (48 per cent of revenue) and Europe (25 per cent of revenue), CSL’s market capitalisation is around $A131 billion and CSL is the largest company listed on the ASX.
CSL has been one of the strongest performing Australian companies since its public listing on the ASX in 1994. For example, the average annual growth in CSL’s share price has been over 25 per cent per annum since being publicly listed in 1994. Currently, CSL is ranked number 1 in global plasma therapies (a $US30 billion global industry and CSL has only two other global competitors) and number 2 in influenza vaccines (a $US6 billion global industry).
What has CSL announced today?
CSL has agreed to acquire from uniQure exclusive global license rights to commercialise an adeno-associated virus (AAV) gene therapy program, AMT-061 (etranacogene dezaparvovec), for the treatment of haemophilia B. CSL notes that the AMT-061 program, currently in Phase 3 clinical trials, could be one of the first gene therapies to provide potentially long-term benefits to patients with haemophilia B.
A single dose of AMT -061 has shown to increase Factor IX (FIX) plasma levels – the blood clotting protein lacking in people with haemophilia B – to a degree that reduces or eliminates the tendency for bleeding for many years. If this treatment is successful, people who have haemophilia B would be able to have a one-time treatment to restore FIX activity to function levels capable of eliminating the need for frequent and ongoing replacement therapies.
CSL will give an upfront cash payment to uniQure of US$450 million followed by regulatory and commercial sales milestone payments and royalties. Under the terms of the agreement, uniQure will complete the Phase 3 trial and scale up manufacture for early commercial supply under an agreed plan with CSL.
What is the outlook for CSL?
The short-term and long-term outlook for CSL is positive. In the short-term, CSL has announced that FY20 profit guidance remains unchanged in constant currency terms (unlike several blue chips ASX listed stocks), and several of the company’s products will see an increase in demand to help battle COVID-19.
Looking forward over the medium to long-term the outlook for CSL is positive.
CSL has achieved economies of scale and has a very strong competitive position in both the plasma and influenza vaccine markets. Additionally, both industries have very high barriers of entry, reducing the likelihood of further competition in the future. An example of CSL’s competitive position is that it is the most efficient in the United States market at collecting plasma which enables it to keep its costs at industry best practice.
In addition, with CSL announcement today, CSL could become a global leader in haemophilia B treatment with this new product. This will add to the list of several products where CSL is the global market leader.
What is the market reaction?
The market reaction to CSL is positive. CSL share price is up 0.5% and is currently trading at A$293.82. This is a positive reaction as the Australian market is down around 1.4%. CSL is trading at a forward P/E ratio 43x and has an annual dividend yield of around 1% (unfranked).
This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.
ASR has no position in any of the stocks mentioned.