CSL (ASX:CSL) share price on watch after hints of ‘far more robust’ vaccine

Bernd Struben | December 7, 2020 3:49pm | More on: CSL BNTX MRNA PFE

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The CSL Limited (ASX: CSL) share price is edging higher today, up 0.2% in afternoon trading.

That’s broadly in line with the wider S&P/ASX 200 Index (ASX: XJO), up 0.4% at time of writing.

With a history of generally delivering fairly steady share price growth, 2020 has been unusually volatile for CSL shareholders. While there are various reasons for this, traders jumping in and out of shares based on the latest COVID-19 vaccine news have certainly helped stir this year’s share price volatility.

CSL and the University of Queensland (UQ) have been working collaboratively on a coronavirus vaccine since the outset of the pandemic.

The sprint to the finish line looks to have been won by the mRNA vaccines developed by Moderna Inc (NASDAQ: MRNA), along with the partnered efforts of Pfizer Inc. (NYSE: PFE) and BioNTech SE (NASDAQ: BNTX).

But the experts at CSL and the UQ believe their own efforts may prove more valuable in the long run.

More on that below. But first…

What does CSL do?

CSL is a global biotechnology company that develops and delivers innovative biotherapies and influenza vaccines.

CSL’s operational business segments include CSL Behring and Seqirus. The company operates predominantly in Australia, the United States, Germany, the United Kingdom and Switzerland.

CSL shares first began trading on the ASX in 1994 and today it ranks among the largest companies on the ASX 200. At the current share price, CSL pays a 1% dividend yield, unfranked. The company paid out both dividends for 2020.

Why could CSL’s COVID vaccine prove to be better?

Professor Paul Young is the head of the UQ program developing a COVID vaccine together with CSL.

Addressing their vaccine, Young said (as quoted by the Australian Financial Review):

It is a more traditional vaccine. I think it will be a far more robust vaccine . . . and a better option for the long term. So I still think it’s an important vaccine even though we’re a little bit behind the mRNA vaccines.

Data from the group’s phase 1 trial is expected soon, with phase 2 and 3 trials scheduled to commence in December. Young said if the trials are successful, their vaccine could be ready for wider use in Australia by mid-2021.

Young also highlighted the historic shortage of medicinal manufacturing capabilities in Australia:

Our sovereign capacity is not perhaps what it could have been. Our technology has led into CSL’s technology just beautifully. That was an excellent marriage. But, many of the other vaccine types that could have been developed in Australia haven’t been able to progress because there hasn’t been the infrastructure to take them into the next stage of development.

Although CSL is working on other projects and has numerous successes under its belt, the pending success or failure of its COVID vaccine is likely to have a significant impact on its share price.