CSL: Shares Remain Undervalued Despite Pipeline Setback

Narrow-moat CSL announced top-line results from its Phase 3 clinical trial evaluating the safety and efficacy of CSL112 versus placebo in reducing the risk of major adverse cardiovascular events, or MACE, in patients following a heart attack. This was CSL’s largest study to date, and while there were no major safety or tolerability concerns, the study failed to meet its primary efficacy endpoint of MACE reduction at 90 days. The company plans to fully analyze the complete data and determine potential further development. But there are no current plans for a near-term regulatory filing. Accordingly, we decrease our likelihood of approval for CSL112 to 0% from 60% previously and lower our fair value estimate by 6% to AUD 310. With CSL’s Hemgenix product recently launched, CSL’s remaining product pipeline is fairly immaterial in our view, contributing just 1%, or roughly AUD 3 per share, of our fair value estimate.