Among CSL’s many products under development, CSL 112 stands out for its potential to address a significant market. Cardiovascular disease is the leading cause of death globally.
CSL 112 is a novel plasma-derived formulation which can be delivered intravenously. It acts as a ‘pipe cleaner’ for arteries to reduce the risk of recurrent cardiac events in patients who have had a heart attack (acute myocardial infarction).
Improving morbidity and mortality in the months following a heart attack has been a difficult problem to solve.
CSL 112 is proving to be far more effective at removing cholesterol from arteries than alternative treatments.
CSL 112 has passed its third and final futility test. The test is part of CSL’s Aegis-II Phase 3 trial and implies some degree of efficacy against the Primary End Points. The ‘pass’ outcome of the interim analysis rules out ‘harm’ but the degree of benefit may yet be moderate. There is still a risk that CSL 112 may not reach commercial status.
The US$0.5 billion Phase 3 trial has the primary end point of reducing Major Adverse Cardiovascular Events (MACE) at 90 days following acute coronary syndromes (ACS). The results are due in two years, partly delayed by COVID-19, after the trial completes in CY23. Once the data is reviewed and licence application complete (US FDA Biologics Licence Application) in CY24, CSL 112 should become commercial in CY25.
Heart disease is the largest cause of death in the US (around 610k deaths annually) with the majority associated with Coronary Artery Disease. This refers to a limitation in blood flow in the blood vessels supplying the heart. This is generally due to a build up of plaque in the coronary arteries. About 735k Americans have a heart attack each year with 525k of those being first timers. Comparable studies suggest that 10-15% of patients with Acute Coronary Syndrome with standard treatment regimes will experience a further MACE event at 90 days.
There are currently no therapies targeting the sub-acute period which has the highest morbidity risk. CSL 112 therefore has the field to itself and is not competing directly against the statins, ß-blockers and inhibitors that target the longer term setting. In addition, the once weekly intravenous administration has a much higher chance of driving therapy adherence whereas daily tablets and self-injected therapies are less likely.
Investment view
CSL’s 1H22 result delivered about 80% of the company’s FY22f net profit guidance. This is set at US$2.15-2.25 billion. We reiterate that this seems very conservative, even while allowing for the settlement of the Vifor acquisition.
The progress on CSL 112 is encouraging and while company management appears to have formed a view around the probability of success by commencing construction of a manufacturing plant, there is still some risk of failure.
Risks to investment view
There is some execution risk for the Vifor Pharma acquisition with completion presently delayed by regulatory approvals. Global blood products markets have been impacted (plasma collections) and this may also present challenges if further variants emerge causing disruptions.
Recommendation
We have retained our Buy recommendation.
