Forum Topics CSL CSL Risks

Pinned straw:

Added one year ago

Thought I'd throw this out to the broader and much more informed SM community.

CSL share price is currently trading down at around 2019 levels because.....as I understand.....of weight-loss drug GLP-1 RA?

I'd appreciate views as to whether this "perceived risk" warrants such a dive in s/p?

Marsdrix
Added one year ago

Diabetics will be perfectly capable of making an absolute mess of their kidneys whether or not they are on a GLP-1 agonist. It may take longer, but it will still happen eventually unless they die of something else first. 

GLP-1 agonists activate GLP-1 receptors on:

  1. Stomach slowing gastric emptying (makes you feel full)
  2. Central nervous system for appetite regulation (wiki said brain stem,I thought this would be hypothalamic nuclei but not critical to this discussion) 
  3. Pancreatic beta cells making them produce more insulin, which reduces blood sugar
  4. Pancreatic alpha cells produce less glucagon (does much the opposite of insulin)


Note there is nothing direct on the kidney.

1 and 2 affect volume of food —> less glucose —> less hyperglycaemia —> less advanced glycosylation end products (AGE) and thus less kidney damage. Note this can be undone the way you can undo a gastric bypass - drinking your calories.  

3 and 4 affect how much sugar stays in the blood, essentially picking up at the point of “less hyperglycaemia” described above. However, how our insulin need is not static and a spanner is thrown in the works of that with every breakfast, lunch, dinner and snack. 


TL;DR - Ozempic may give people a better control of how much they eat, but not what they eat or how judiciously they control their sugars. 

I’m a doctor and even less worried about the impact of these drugs on CSL than Resmed, and I’ve been buying resmed. 

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Solvetheriddle
Added one year ago

@Jimmy i havent heard a weight loss angle, if there is one please share, but CSL has more moving parts now than at any time over the last 20 years, by eg being poor margins post C19 (now bottoming), new CEO, new acquisition, challenger drug in haemophilia and a couple of others, no recent big new drugs (although a few possibles in the pipeline), also just went through the biggest raising in Australian corporate history (so im told) so everyone full up on CSL. one or two headwinds there. maybe ive forgotten a few.for me the big one is margin recovery.

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Jimmy
Added one year ago

@Solvetheriddle I hadn't heard of the "weight loss" issue either until a comment via Rudi relayed on AUSBIZ earlier this morning saying he expected declines when trade opened in both RMD & CSL....so I'm guessing there must have been some sort of info released and/or mentioned overnight.

Nonetheless I've been buying this morning and feel comfortable doing so as imo opportunities like this don't present often especially when we're talking about arguably Australia's best listed company.

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BoredSaint
Added one year ago

Supposedly these drugs are going to also solve Kidney diseases.. Which are a large part of the Vifor division of CSL.

All seems too good to be true for mine but the market is always going to look at the short term risks..

Disc: Hold both CSL and RMD

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Solvetheriddle
Added one year ago

@BoredSaint thanks, i saw NVO/LLY up last night, its a pairs trade at this stage :)?

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edgescape
Added one year ago

There are so many types of kidney disease not caused by diabetes such as infection etc...

Seems glp1 is specific for CKD associated with diabetics. But need to do more reading to check

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Remorhaz
Added one year ago

This is the very brief broker note which came out from Morgan Stanley this morning for CSL re GLP1

Encouraging results sees GLP1/CKD trial stopped early

NOVO (covered by Mark Purcell) has announced encouraging efficacy results from its ph3 FLOW trial looking at the effect of GLP-1s on kidney outcomes for patients with chronic kidney disease (CKD) and Type 2 diabetes (T2D). The trial, which began in 2019, has ~3,500 patients enrolled and a read out was previously expected in late 2024. NOVO now expects a read out in 1H24.

Press release from NOVO states: “The decision to stop the trial is based on a recommendation from the independent Data Monitoring Committee (DMC) concluding that the results from an interim analysis met certain pre-specified criteria for stopping the trial early for efficacy. Based on the decision to stop the trial at interim, the process of closing the trial will be initiated.”

We think this could be a potential negative catalyst on CSL. CSL Vifor has a JV with Fresenius Medical Care, with ~45% of Vifor revenue exposed to nephrology and dialysis (~8% of CSL’s group earnings). 

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Remorhaz
Added one year ago

and FWIW Goldman Sachs Australia also released their Equity Research on the topic - titled:

Australia Healthcare: Our perspectives on the implications of NOVO’s GLP-1 FLOW study to our ASX coverage 

it runs to 9 pages in total and mostly covers their thoughts on potential impacts to CSL but also touches on both RMD and FPH

Their summary ...

NOVO’s announcement that the FLOW trial had been stopped early on efficacy was initially met with a muted reaction on the ASX. In this note, we provide some basic context around the study, and offer our perspectives on what this news likely means for our coverage

Overall, we contextualise the link to CSL (potentially a direct earnings impact for Vifor, which generates c.50% of its revenues through the kidney disease/dialysis markets), but also outline why each positive incremental outcome study poses additional uncertainty for the other companies positively levered to diabetes/weight/cardiovascular outcomes/renal disease etc, like RMD and FPH in our coverage (largely due to improving prospects for broader coverage/payor access over time)

We make no changes to our forecasts, and reiterate our Buy-rating on RMD and FPH (on CL), and Neutral-rating on CSL


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edgescape
Added one year ago

Got to be the hiccups from the Vifor takeover. Always thought what they paid was a bit much.

They should have bought DXB instead :)

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