Hoping for an update on CSL 112 when CSL announce their year end results in mid August. Australia's biggest Tatts ticket.
"Blockbuster" heart trial could put CSL on track to $250
Lex Hall | 16 Jul 2018Text size
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This ASX-listed biotech is working on a "blockbuster" cardiovascular product that has the potential to take its stock price to $250, says Morningstar equity analyst Chris Kallos.
Blood plasma biotherapies company
CSL (ASX: CSL) is in late-stage trials of a less invasive cardiovascular therapy. Known as CSL112, the treatment aims to dissolve the buildup of plaque – a leading cause of heart attacks.
CSL112, which is being trialled among 17,000 people, has prompted Kallos to raise his fair value estimate for the company to $200, with the potential to reach $250, pending the trial's success. At midday, CSL was trading at $202.
“It is a blockbuster, no doubt about it,” Kallos says. “This company is increasingly diversified and this is a very attractive product that adds to that.
“A lot of money has been spent by other companies trying to do what CSL is doing. But we think CSL has a unique mechanism that allows the transportation of the plaque very quickly.
“Using a 55 per cent probability of success for CSL112 adds $40 to our revised fair value estimate of $200 a share. And all else equal, we see upside potential of $250 pending launch, with downside of $140 should CSL112 fail to progress.”
The new treatment could be on the market in five years pending the trial's success.
The probability of success is based on data from the Food and Drug Administration in the US, which over the past 10 years has approved 55 per cent of drugs targeting cardiovascular indications that reach phase 3.
There is a high incidence of people suffering a second heart attack within 90 days of their first attack, and a subsequent high mortality rate.
Kallos says the treatment could be on the market in five years, with peak sales of about US$10 billion by 2029, assuming a role in first heart attacks.
"If they’re successful they should have a submission to the regulator in 2022. The review process should take a year so they could have a product on the market in 2023."
Kallos concedes the product candidate remains relatively high risk, as its efficacy is yet to be proven, but that it has a place in treating sufferers of a first heart attack.
"Pending successful approval of phase-3 trial, I’m assuming that if you have your first heart attack this treatment will be given to you.
"If this proves successful, the idea would be to lessen the need for invasive procedures like stents and instead provide a softer approach like drug therapy."
Read the report on the CSL trial
here.
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Lex Hall is a Morningstar content editor, based in Sydney.
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