CSL Vifor announced that the US FDA has granted its US distribution partner American Regent (a Daiichi Sankyo Group Company) approval for Injectafer for the treatment of iron deficiency in adult patients with heart failure and fatigue or breathing difficulties which prevent physical activity.
Heart failure labels are already applied in many jurisdictions including across the EU and Australia. Clinical applications are well understood with Iron Deficiency a common comorbidity in patients with heart failure. Injectafer is the standard of care in certain jurisdictions, given positive outcomes and cost savings which deliver favourable quality-adjusted life years. Iron infusion may have already been administered in the US, however, this was a multi-hour process, leaving patients debilitated, compared to Injectafer which has a much shorter 20-30 minute infusion.
The opportunity is significant with the condition impacting ~2.8m Americans. Using Europe as a precedent, CSL Vifor’s heart failure indication represents ~20% of Injectafer sales (branded Ferinject in the EU), with guidelines showing intravenous (IV) iron reduces hospitalisation by ~26%. The heart failure label opportunity addresses an unmet need in treatment and presents a clear opportunity for upside value in the Vifor acquisition.
Investment View
Iron is likely to be a key earnings stream of the CSL Vifor group moving forward, with the total addressable market of iron deficiency forecast to grow at a CAGR of 3.7% until CY30. The approval should increase investor confidence that Vifor can grow divisional sales by double digits into CY26 before generic brands arrive.
CSL is expected to continue to grow EPS in the high teens over the next 2-3 years, driven by plasma collection recoveries, improving margins from lower collection costs and potential synergies from the Vifor acquisition. Earnings revisions year to date have been largely positive as the market begins to appreciate the opportunity. FY23e guidance looks conservative in our view, and if CSL can execute on margin recovery, EPS growth can remain elevated for 3-5 years.
Risks to Investment View
The Vifor acquisition is now complete and its integration with CSL is underway. Progress on this will reveal any challenges or changes to views of the benefits and costs. Global blood products markets have been impacted (plasma collections) and this may also present challenges if further variants emerge causing disruptions. Regulatory approvals of new products also remain a risk to future growth prospects.
Recommendation
We have retained our Buy recommendation.
