I wondered whether yesterday's announcement from $CSL marked the first sign of the change in R&D Stratgey, following on from the recent shake-up.

ASX Announcement

Having read @Jimmy's daily newsfeed, it seems I am not the only one: the relevant extract follows, with emphasis added by me.

2248 GMT - CSL's collaboration agreement with closely held VarmX to advance a blood-coagulation treatment signals the start of a new R&D philosophy for the Australian company, according to Jefferies. CSL aims to focus on development by buying assets into its pipeline. VarmX owns the VMX-C001 treatment that aims to restore blood coagulation in patients taking a FXa inhibitor. "We believe this could be an adjunct to CSL's Kcentra franchise, and if successful will compete with Andexxa," analyst David Stanton says. Jefferies estimates annual peak sales for VMX-C001 of some US$240 million. It retains a "buy" call on CSL. ([email protected]; @dwinningWSJ)

Looking back over the last 10-15 years, the lion's share of $CSL's innovation capital has either been organic R&D or buying entire businesses/platforms (think Sequirus and Vifor).

Of course, there are exceptions. For example, Hemegnix is an example of successfully licensed molecule. And there are others.

But on balance, I think it is fair to say that $CSL has been lighter on licensing than industry peers, where (if I recall correctly) something like one-third of NDA candidates are brought through the pipeline from origins in licensing or single molecule acquisitions.

With its now narrowed therapy area focus, it makes sense to me that $CSL allocates more capital to licensing or acquiring the most promising molecules wherever they come from. Such a more balanced approach is also reasonable given some of the recent failures of late stage organically-developed candidates(e.g., CSL112). However, that said, even for a licensed product, $CSL management will need to make the key decision on whether to advance the product through the later and most expensive stages so, while interesting and while licensing can augment the organic pipeline, it doesn't change the importance of effective decision-making along the development funnel.

Beyond that, it is hard to read much into yesterday's announcement, apart from the clear fit of VMX-C001 into the $CSL portfolio.

As might have been predicted, $CSL's SP has continued to fall about 10% since I took my initial modest stake. The set-up is looking good for R&D Day in November, after which I will decide whether to take a bigger bite. The hurdle is getting lower!

Disc: Held in RL and SM