Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn
About

News

"Blockbuster" heart trial could put CSL on track to $250

Lex Hall  |  16 Jul 2018Text size  Decrease  Increase  |  
Email to Friend

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.”

medical treatment cardiac heart hospital CSL

Investing Compass
Listen to Morningstar Australia's Investing Compass podcast
Take a deep dive into investing concepts, with practical explanations to help you invest confidently.
Investing Compass

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

 

More from Morningstar

• Aussie investors putting too many eggs in the local basket

• Tencent, Great Wall among latest global stock picks

Make better investment decisions with Morningstar Premium | Free 4-week trial

 

Lex Hall is a Morningstar content editor, based in Sydney.

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

is senior editor for Morningstar Australia

© 2021 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'regulated financial advice' under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

Email To Friend