Discoveries in life sciences, be it in the field of agriculture, human health, environment, information technology, food or bioinformatics, has been driving the growth of businesses since the last few decades. In the contemporary and dynamic world, the influence of biotechnology has significantly risen, with new products and processes being constantly developed, establishing economic and social implications.
In this article, we would look at the recent developments of ASX-listed global biotechnology company, CSL Limited, as the market awaits its 2019 full year result, which would be released on 14 August 2019.
Before diving into the updates and stock performances, let us acquaint ourselves to the company:
A leading global biotech company and one of the largest and fastest-growing protein-based biotechnology businesses, CSL Limited (ASX: CSL) is a developer and provider of innovative biotherapies and influenza vaccines. The company aims to better people suffering from a range of serious and chronic life-threatening medical conditions. CSL caters to over 60 countries and has two businesses in its kitty- CSL Behring and Seqirus. CSL Limited was listed on the ASX in 1994. CSL Behring had 5 major launches in the last 24 months, which are looked upon as some of the most successful launches in the industry:
CSL Behring New Product Launches (Source: CSL’s Report)
New Global HQ at Parkville biomedical precinct
A week before the release of the much anticipated FY19 results, CSL announced that it has entered into an agreement with Melbourne-based property development company, PDG to build superlative laboratories and offices as the company moves its global corporate headquarters, a 16-storey flagship building, right in the centre of Parkville biomedical precinct.
Being regarded as a significant event in the Australian biotech ecosystem, the new facility would enhance the growth of the academic biomedical research and industry, and support collaborations. An added advantage of the attractive location is the well-established medical research cluster comprising of universities, hospitals and related institutes. The public transport connectivity is another benefit of the location.
CSL’s R&D history (Source: CSL’s Report)
Project planning has commenced, with approximately 1300 people in the construction of phases one and two. The completion is expected by 2024, post which the facility would be home to 800 CSL employees from various departments. The Bio21 Institute, which presently lodges approximately 130 company researchers and the Seqirus’ influenza and antivenom manufacturing operations would continue to exist.
New on Board in CSL’s Seqirus business
On 17 July 2019, the company pleasingly notified the market and welcomed Ms Anjana Narain as Executive Vice President and General Manager of its Seqirus business, who would take over the baton from Gordon Naylor. Ms Anjana has previously worked with significant players of the industry like GSK, Merck, and Bayer. Carrying 27 years of experience in vaccines and biopharmaceuticals, Ms Anjana’s term was to commence on 1 August 2019.
Established on 31 July 2015 and counted amongst the world’s largest influenza vaccines providers, Seqirus’ differentiated technologies are expected to further grow in her term, as the company is well positioned to deliver sustainable growth.
GSP License in China
CSL had announced in the beginning of the year, that it would transition to its own Good Supply Practice License in China in FY20. The license would create a marketplace for the company to own and sell products in the local Chinese market.
The company is the largest supplier of imported human albumin, which is being distributed via a third party. CSL been importing from China for over three decades, with the FY18 albumin sales into this market exceeding $500 million. After transitioning to the company’s GSP distributor, product sales would be logged after the product leaves the GSP distributor in China. There would be a direct trading business model, driving efficiency.
With respect to the GSP license, the company notified on 21 June 2019 that the transition would create a ‘one-off’ financial effect in FY20 period. The company expects lower reported albumin sales in the range of $340 - $370 million, with a modest impact on cashflow and improved cash collection cycle. The profit effect would be in sync with the previous margins of CSL Behring. Besides this, the annual sales of albumin are likely to return to normalised levels in FY21 in China, post completion of the transition.
Shareholder Information Meetings
On 28 and 29 May 2019, the company conducted a Shareholder Information Meetings in Canberra and Brisbane, informing that its $30 billion industry in plasma therapies made it world #1. The $6 billion industry in influenza vaccines made it Global #2 and CSL was #5 Largest Global Biotech player in the world. Besides, the entity held a great market position with revenues of nearly $8 billion in more than 60 countries and R&D investment of $702 million. CSL’s Net debt/EBITDA was recorded at 1.3x.
On outlook front, the company stated that it aimed to have ~30-35 centre openings in FY19 with the Plasma Collection Network Expansion in mind. As of March 2019, there were over 200 collection centres, with the rate of centre openings of 2 to 3 per month.
CSL’s 1H 19 Financial Highlights (Source: CSL’s Report)
CSL’s New Chief Operating Officer
On 16 May 2019, the company pleasingly named Dr Paul McKenzie as the new COO, w.e.f. 3 June 2019. With a track record of success in leading operational excellence and profound biotechnology experience, Dr Paul has previously been associated with Johnson & Johnson, Bristol-Myers Squibb, Biogen and Merck. During his tenure with CSL Limited, he would be responsible for the international end-to-end supply chain establishment and the associated strategy.
By the end of the market close, on 8 August 2019, CSL’s stock was quoted at a price of A$220.86 on the ASX, up by 1.818 per cent from the prior closing price. The market capitalisation of the company is A$99.18 billion, and with outstanding shares of 453.14 million. With an EPS of A$5.721 and an annual dividend yield of 1.13 per cent, the stock’s YTD return is 18.07 per cent. In the last three and six months, it has generated returns of 10.22 per cent and 13.64 per cent, respectively.
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