Is CSL share price still a buy this year?

Summary

• Biotech player CSL Limited announced its FY20 results with an impressive growth of 17% and 9% in net profit after tax and revenue, respectively (on constant currency basis).
• CSL had earlier announced the initiation of first human trials using the University of Queensland’s COVID-19 vaccine in Australia. Healthy volunteers were administered the first dose of the candidate in mid-July.
• The results of the trial would come in approximately three months, and once it is successful would be handed to CSL for the next stage.
• The Company also completed the acquisition of Vitaeris Inc and agreed to acquire exclusive global license rights to commercialise AMT-061 from uniQure.

Biotech major CSL Limited, an ASX 200 member, focuses on rare and severe diseases and also develops influenza vaccines. At present, the Company competes on the global stage and is amongst the largest and fastest-growing protein-based biotechnology businesses. It is also a leading provider of in-licensed vaccines.

CSL shares have delivered returns of 6.64% and -4.28% on a YTD basis and in the last three months, respectively. At AEST 3:33 PM, CSL share price stood at A$314.200, up 7.129% from the previous close. The Company has a market cap of A$133.17 billion and has around 454.05 million outstanding shares.

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CSL Limited’s FY20 NPAT up 17%, Revenue increases by 9% over FY19

CSL announced its FY20 results (period ended 30 June 2020) today with the numbers highlighting a robust performance for the financial year. Below are the highlights:

• Net profit after tax (NPAT) stood at US$2.103 billion, up 17% (in constant currency or cc) while the revenue jumped 9% (in cc) to reach US$9.151 billion.
• Earnings per share stood at US$4.63 as compared to FY19 figure of US$4.236.
• Full-year dividend was up 9% at US$2.02 per share.

CSL’s performance was driven by notable growth in the immunoglobulin franchise and haemophilia franchise’s evolution, led by IDELVION®. The Company had no material impact on its top-line due to COVID-19.

Outlook: CSL Limited expects an NPAT in the range US$2.100 – US$2.265 billion (in cc) for FY21. However, COVID-19’s potential impact on the supply chain remains a key variable. The Company has also factored in additional R&D expenses, including the COVID-19 vaccine development partnership.

CSL’s battle against COVID-19:

Like many other health care companies around the world, CSL is also playing a crucial role in the fight against COVID-19. Its role is evident through the COVID-19 pandemic period.

Let us take a look at CSL’s developments concerning COVID-19 vaccine development.

• On 6 April 2020, during the early stage of the COVID-19 pandemic, Biotest, BPL, LFB, and Octapharma allied with CSL Behring and Takeda Pharmaceutical Company to develop a potential plasma-derived therapy for the treatment of COVID-19. It was highlighted that the collaboration would leverage leading-edge expertise and work that the companies already have underway.
• On 8 April 2020, CSL Behring and SAB Biotherapeutics entered into a partnership to provide new potential COVID-19 therapeutic.
• On 6 May 2020 CSL announced that its subsidiary CSL Behring Australia started the onshore development of an anti-SARS-CoV-2 plasma product that is capable of treating people with severe complications related to COVID-19. CSL had planned for the development of COVID-19 Immunoglobulin at its advanced manufacturing facility located in Broadmeadows, Victoria.
• On 5 June 2020, CSL partnered with University of Queensland and CEPI, the Coalition for Epidemic Preparedness Innovations for the development and production of the COVID-19 vaccine candidate. CEPI and CSL will share the cost related to the clinical development and manufacture of the vaccine candidate. The Company is optimistic that the vaccine would be made available in 2021 in case the clinical trials are successful.
• CSL confirmed about its ongoing clinical trial at investigational sites globally. It was in close contact with researchers engaged in the evaluation of promising new medicines, discussing the best methods to handle patient visits and follow-up appointments.
• In the announcement dated 13 July 2020, it was highlighted that the first human trials using the University of Queensland’s COVID-19 vaccine had started in Australia where healthy volunteers were administered the first dose.
  • Clinical trial specialist Nucleus Network will dispense the clinical batch of vaccine for use in the trial. It has been produced by the UQ and CSIRO, with technical support from CSL and Cytiva.
  • The trial will assess the safety & immune response of the vaccine in a group of healthy volunteers. If successful, UQ researchers will hand the vaccine’s development over to CSL to move into the next stage.

Also Read: How is the Global Biotech Player CSL Limited Responding to COVID-19?

COVID-19 Update

• The Company took various steps to ensure the health and safety of the workforce, which comprised of restricting international travel, postponement of large group meetings and encouraging employees to leverage multiple communication technologies to minimise business disruption.
• CSL provided a continuous supply of medicines worldwide. It also kept an eye on operational impact as a result of COVID-19.

CSL’s Growth Prospect:

On a global level, the number of COVID-19 cases continues to rise, and there is still uncertainty concerning the duration this pandemic will last. However, the best part is that few countries like Russia and China have announced the release of the COVID-19 vaccine. There were around 21.756 million cases of coronavirus as per the World Health Organization on 18 August 2020 (2:16 PM CEST).

Many countries who managed to reduce the numbers are experiencing the second wave of COVID-19. Although these countries have announced the release of COVID-19 vaccine, still it would take time for mass production and reach every corner of the world.

CSL’s Other Achievements:

• On 8 June 2020, CSL Behring announced that it agreed to acquire Vitaeris Inc., which is a clinical-stage biotechnology company and it focuses on phase III development of clazakizumab. Clazakizumab is an anti-interleukin-6 monoclonal antibody which is used for treating chronic active antibody-mediated rejection which is the reason behind long-term rejection in kidney transplant recipients.
• On 24 June 2020, CSL Behring announced that it agreed to purchase exclusive global license rights from uniQure to commercialise an adeno-related virus gene therapy program, AMT-061, which is used for the treatment of haemophilia B.
• The Company, at that time, updated that AMT-061 program was in Phase 3 clinical trials. It could be the first gene therapies to deliver possibly long-term advantages to patients suffering from haemophilia B.

Robust financial results, no material impact from the pandemic so far, growing involvement in the COVID-19 vaccine development race, strategic acquisitions and partnerships, and an impressive outlook – all seem to work in favour of the biotech behemoth. However, CSL Limited has highlighted the uncertainty surrounding the potential impact of COVID-19, and thus, the scenario must be assessed with a little caution.