The group is already one of the ASX’s best performing stocks thanks to surging demand for the medical therapies it makes from donated blood plasma. It quietly became Australia’s second most valuable company this year, worth a stonking $127 billion.
“If the product works and the trial is successful, it would be the single biggest opportunity for a product that CSL has developed,” says respected Citi biotech analyst John Deakin-Bell.
“We have no idea if it’s gonna work or not. But if it does, then it is a revenue generator that will be multiples of their more recently launched products.”
After more than 20 years in development, the moment of truth is fast approaching for CSL112.
CSL revealed this month that 7,000 heart attack patients have now taken part out of a eventual pool of 17,000 subjects for its phase-three trial, which it launched in 2018 and estimates will cost up to $800 million.
Cardiovascular diseases is the world’s leading killer, responsible for 17.7 million deaths or 31 per cent of all global deaths, according to the World Health Organisation, with about 7.4 million of those due to coronary heart disease.
The main cause of heart attacks is the build up of cholesterol as fatty deposits on the artery walls, which blocks blood supply to the heart.
CSL112 is a formulation of a naturally occurring protein called apolipoprotein A1, or apoA-I which regulates the process that flushes cholesterol out of the arteries and to the liver, where it is processed out of the body.
Earlier trials have shown infusing CSL112 into the blood stream enhances this process.
“We know that it does this – we know that it does it very effectively,” says Dr Bill Mezzanotte, CSL’s head of research and development.
“What we hope is that by giving this infusion at the time of a heart attack, we will start to transport cholesterol out… of the heart and other parts of the body.
“And by doing so, we will prevent what is unfortunately a rather relatively common side of side effect of a heart attack, which is a secondary cardiovascular event.”
The trial is underway in 46 countries at around 900 hospitals, including 25 in Australia, where test subjects are administered either CSL112 or a placebo via intravenous infusion within 48 hours of being admitted with a heart attack.
They receive the infusion once a week for the next three weeks and are monitored for the next 90 days to compare the instances of secondary heart attacks.
Mezzanotte said early signs are promising, based on the uptake from test doctors and subjects willing to take part. “That indicates that there’s a real need there,” he says.
There’s a reason CSL is willing to spend close to a billion dollars on a project it might never bring to market: the potential rewards are enormous.
CSL estimates that there around 1.2 million heart attack discharges every year across the US, France, Germany, Italy, Spain and the UK every year, meaning there is a potential pool of 200,000 to 270,000 patients annually for CSL112 in those markets alone.
The company hasn’t put a figure on what this potential market could be worth or committed to a launch timeline.
But Citi analyst Deakin-Bell thinks the product could be released in early 2024 and eventually reach global sales of around $5.75 billion (at current exchange rates) a year. To put that in context, CSL’s revenue was $12 billion last year.
“It’s the biggest opportunity in the R&D pipeline and it’s also the closest to market. They’ve never had a drug this big in a phase-three trial,” Deakin-Bell says.
Deakin-Bell says that, like most phase-three trials, he sees a 50/50 chance CSL112 will make it over the line. After that, the “size of the prize” depends on to what extent the clinical results convince doctors and payers – which in the US means health insurers.
Deakin-Bell has estimated it could sell for around $US15,000 per patient – which he says is a reasonable price if it prevents patients being readmitted to a much more expensive second trip to hospital.
Peter Barlis, an interventional cardiologist and professor of medicine at the University of Melbourne, says CSL112 showed significant merit and could be a “game changing” therapy that could reduce the burden of heart disease for both patients and the health system if it works.
“This is an extra toll in the armamentarium that could potentially make a significant reduction in the burden of having repeat events,” Barlis says.
“But we have to continue using a current established techniques that have also been shown to reduce the burden.”
CSL’s fortunes have risen in concert with demand for immunoglobulins, also extracted from blood plasma mostly donated at its 220 or so donation centres in the US, and is used to treat rare and life-threatening immunodeficiency and auto-immune diseases.
Deakin-Bell says bringing CSL112 to market would also help diversify CSL’s business at a time when gene therapy starts to threaten some of its existing products, including those that treat hemophilia.
Jun Bei Liu, lead portfolio manager of Tribeca Investment Partner’s billion Alpha Plus Fund, has CSL as one of her top 10 investments and is watching the CSL112 trial with cautious optimism.
“If it does work, it opens up enormous market opportunities for CSL,” she says.
“Even though we get excited about this potential product, we’re reasonably pragmatic about it.”
She thinks the market has already priced into CSL’s share price a 20 to 30 per cent chance of CSL112 getting into hospitals, and that its stock will respond “very positively” if the trial is successful.
As for the eye-watering amount CSL is spending on this trial, which contributed a large portion of its $832 million research and development bill last year, Liu says she and other investors see this as money well spent.
“They have demonstrated their ability to generate return on those investments,” she says.
“And to us that is the right way of spending their capital rather than holding back and eventually letting others surpass them in terms of competitive edge.”
Business reporter at The Age and Sydney Morning Herald.