Update Regarding Vifor Pharma Acquisition

CSL has previously advised that it expected to be in a position to close the acquisition of Vifor Pharma AG by June 2022. CSL now expects the regulatory approval process to take a few more months. 

CSL remains confident of completing its acquisition of Vifor Pharma AG and looks forward to expanding its presence in the rapidly growing nephrology market, as well as leveraging the companies’ combined expertise to continue to deliver innovative solutions to rare and serious illness. 

CSL has delivered a performance in line with expectations with a net profit after tax of $1.76 billion for the first half of financial year 2022, down 3%, or 5% on a constant currency basis (CC) and revenue up 4% at CC. The interim dividend is US$1.04 per share. Once converted to Australian currency, the interim dividend is approximately A$1.46 per share, up 8%. The market has responded well to this announcement with CSL shares up 6.61% to $259.07

Mr Paul Perreault, CSL’s Chief Executive Officer and Managing Director said, “CSL has delivered a result in line with our expectations in a challenging environment brought about by the ongoing impacts of the global COVID pandemic.”

“I am proud of the way our dedicated employees have remained focused on our promise to patients and public health. This is a great reflection of the CSL values and the Company’s resilience and agility in these unprecedented market conditions”.

“Our core franchise, the immunoglobulin portfolio, has been impacted by the industrywide constraints on collecting plasma in FY21 during the course of the global pandemic”.

“We have responded by implementing multiple initiatives in our plasma collections network, which has given rise to significant improvement in plasma volumes collected. Given the long-term nature of our manufacturing cycle, this will underpin stronger Ig and albumin sales going forward”, Mr Perreault said.

“I am pleased to report that our key products, not limited by plasma collections, continue their strong growth trajectory”.

CSL has completed its $750 million share purchase plan (SPP), which was first announced on Tuesday, 14 December 2021.

This SPP complements two other capital management initiatives enacted in support of the proposed acquisition of Switzerland-based Vifor Pharma, including an Institutional Placement of A$6.3 billion (US$4.5 billion) and new long term debt facilities of US$6 billion, which will be finalised in due course.

The SPP received strong support from eligible shareholders with a total of 56,1803 individual holders participating. Valid applications totalled A$942,675,000.

As the total value of applications received under the SPP exceeded the SPP target size of A$750 million, CSL has undertaken a pro rata scale-back of applications consistent with the scale-back principles set out in the SPP booklet.

Under the SPP, investors received CSL shares for $253.57 each, representing a two per cent discount to the five-day volume-weighted average price. Unfortunately, CSL has trended down to be trading at $243.75 at the time of this straw.

CSL has announced the successful completion of its A$6.3 billion institutional placement. Proceeds raised will contribute to funding CSL’s acquisition of Vifor Pharma. CSL will issue approximately 23.1 million new shares under the Placement which will rank equally with existing CSL ordinary shares at their issue date. This represents approximately 5% of the number of CSL shares currently on issue.

CSL’s Chief Executive Officer and Managing Director, Mr Paul Perreault said “We appreciate the support we received from the investment community, including existing and new shareholders, for what is the largest ever primary equity raise in Australia. We are now pleased to launch our share purchase plan for eligible shareholders on Tuesday, 21 December 2021, and we look forward to delivering on the exciting growth opportunities underpinning the acquisition of Vifor Pharma.”

Update on The University of Queensland COVID-19 vaccine

The University of Queensland (UQ) and CSL (ASX:CSL; USOTC:CSLLY) today announce that the Phase 1 trial of the UQ-CSL v451 COVID-19 vaccine has shown that it elicits a robust response towards the virus and has a strong safety profile. There were no serious adverse events or safety concerns reported in the 216 trial participants. However, following agreement with the Australian Government, CSL will not progress the vaccine candidate to Phase 2/3 clinical trials.

The University of Queensland commenced a Phase 1 trial of their COVID-19 vaccine candidate – v451 – in July 2020, to assess safety and immunogenicity in healthy volunteers. CSL was working towards taking responsibility for the Phase 2/3 clinical trial and large-scale manufacture of the vaccine, upon completion of successful trials.

The Phase 1 data showed the generation of antibodies directed towards the “molecular clamp” component of the vaccine. These antibodies interfere with certain HIV diagnostic assays. The potential for this cross-reaction had been anticipated prior to the commencement of the trial. Participants were fully informed prior to their involvement that this could occur. Blood samples from study participants were tested after vaccination and it was found that these molecular clamp antibodies did cause a false positive on a range of HIV assays. Follow up tests confirmed that there is no HIV virus present, just a false positive on certain HIV tests. There is no possibility the vaccine causes infection.

With advice from experts, CSL and UQ have worked through the implications that this issue presents to rolling out the vaccine into broad populations. It is generally agreed that significant changes would need to be made to well-established HIV testing procedures in the healthcare setting to accommodate rollout of this vaccine. Therefore, CSL and the Australian Government have agreed vaccine development will not proceed to Phase 2/3 trials.

The Phase 1 trial will continue, where further analysis of the data will show how long the antibodies persist, with studies so far showing that levels are already falling. The University of Queensland plan to submit the full data for peer review publication in the future.

UQ Vice-Chancellor, Professor Deborah Terry, said while the outcome was disappointing, she was immensely proud of the UQ team who had shouldered a heavy burden of responsibility while the world watched on. “I also want to thank our many partners, our donors – including the Federal and Queensland Government – and of course the 216 Queenslanders who so willingly volunteered for the Phase 1 trials.”

UQ vaccine co-lead, Professor Paul Young, said that although it was possible to re-engineer the vaccine, the team did not have the luxury of time needed. “Doing so would set back development by another 12 or so months, and while this is tough decision to take, the urgent need for a vaccine has to be everyone’s priority.”

“I said at the start of vaccine development, that there are no guarantees, but what is really encouraging is that the core technology approach we used has passed the major clinical test. It is a safe and well-tolerated vaccine, producing the strong virus neutralising effect that we were hoping to see. So we will continue to push forward and we are confident that with further work the Molecular Clamp technology will be a robust platform for future vaccine development here in Australia and to meet future biosecurity needs.

Dr Andrew Nash, Chief Scientific Officer for CSL said “This outcome highlights the risk of failure associated with early vaccine development, and the rigorous assessment involved in making decisions as to what discoveries advance.”

“This project has only been made possible by the innovative science developed by world-class scientists at The University of Queensland and the strong collaboration between our organisations, and many others, over the last 10 months. CSL and Seqirus are committed to continuing our work to protect the Australian population against COVID-19. Manufacture of approximately 30 million doses of the Oxford/AstraZeneca vaccine candidate is underway, with first doses planned for release to Australia early next year. In addition, CSL has agreed at the request of the Australian Government to manufacture an additional 20 million doses.”

CSL does not anticipate this announcement will have any impact on previously provided financial guidance for FY2021.

Next-generation influenza vaccine manufacturing facility to be built in Australia

AUD$800m investment optimises cell-based technology

Global biotechnology leader CSL Limited (ASX:CSL; USOTC:CSLLY) today announced that Seqirus, a wholly owned subsidiary of CSL, plans to invest more than AUD$800 million in the construction of a new biotech manufacturing facility in Melbourne to supply influenza vaccines to Australia and the rest of the world.

This investment decision follows the agreement with the Australian Government for the supply over 10 years of influenza pandemic protection for the Australian population, antivenoms for Australian snakes, spiders and marine creatures and Q-Fever vaccine.

The new facility, to be built at a site in the Melbourne Airport Business Park, will use innovative cell-based technology to produce influenza vaccine for both seasonal and pandemic purposes. These products will serve the needs of the Australian population and have capacity to support global markets. Construction of the state-of-the-art plant is expected to commence in 2021 with the facility projected to be operational by mid-2026.

The facility will also manufacture Seqirus’ proprietary adjuvant MF59® - a substance added to some vaccines to improve immune response and to reduce the amount of antigen needed for each vaccine, enabling more doses to be manufactured more rapidly.

CSL’s Chief Executive Officer and Managing Director Paul Perreault said, “Providing safe and effective influenza vaccines is essential in securing our defences against serious public health threats.”

“The facility will be an important addition to our global influenza manufacturing supply chain, incorporating the technology platform used in our Holly Springs, North Carolina facility. Cell-influenza vaccine technology offers many advantages over the existing process including being more scalable and offering faster production – particularly important in the case of influenza pandemics.

“As a proudly Australian company, we are pleased to make this investment in worldclass advanced manufacturing. This decision will ensure the future of 1,000+ Science Technology Engineering & Manufacturing jobs in Victoria and a supply chain of more than $300 million annually,” he said.

The Victorian Government will also contribute to the project to reinforce Victoria’s already globally significant medical research and biotechnology community.

CSL to manufacture and supply University of Queensland and Oxford University vaccine candidates for Australia

• Heads of Agreement signed between CSL and the Australian Government to supply 51 million doses of University of Queensland vaccine to Australia, with first doses scheduled for release from mid-2021 following successful clinical trials.
• Heads of Agreement signed between CSL and AstraZeneca for the expected manufacture of approximately 30 million doses of the Oxford University vaccine candidate AZD1222, for supply to Australia with first doses scheduled for release early 2021, following successful clinical trials. 
• Funding Deed with the Australian Government and CSL to ready its facilities for the manufacture of the AZD1222 vaccine candidate, and provide an additional COVID-19 vaccine option for Australians