CSL expects COVID-19 vaccine in ‘near future’ as profit lifts 9.6pc

While optimistic, CSL says multiple vaccines will be needed to quash the coronavirus pandemic, as its lifted annual profit 9.6pc.

CSL’s Seqirus development lab.

Shares in CSL – the biggest company on the ASX – have surged to a three month high after it became one of the few companies to deliver profit guidance for the current financial year, boosting confidence among coronavirus-rattled investors.

Chief executive Paul Perreault also revealed CSL was advancing with its three-pronged approach to combat COVID-19, stating a vaccine could ready for emergency use by mid-2021 if clinical trials are successful.

The company has been working with the University of Queensland since January on developing a vaccine, which began phase one clinical trials last month.

“We have tightened the timelines on that. If everything is successful - that is if it’s safe, it’s effective - we believe that we could have product ready for emergency use by mid 2021, so less than a year away. It’s coming,” Mr Perreult said.

As revealed by The Australian on Monday, CSL is also discussing potential local manufacturing of Oxford University and AstraZeneca’s candidate, as well as developing a hyperimmune treatment in partnership with Japan’s Takeda for the most serious cases.

“Seeing so many people affected by COVID-19, over the past several months, makes us even more determined in our efforts to fight the virus. Yet, no single vaccine or therapeutic approach is going to solve this health crisis; multiple approaches are essential.”

Mr Perreault said he expected CSL’s net profit after tax for FY21 to be in the range of approximately $US2.1bn ($2.9bn) to $US2.265bn at constant currency, representing growth over financial year 2020 of up to 8 per cent.

It comes as CSL’s net profit rose 9.6 per cent to $US2.102bn in the year to June 30, with the company citing “solid growth” in its immunoglobulin portfolio and its Seqirus influenza vaccine business.

The strong result sent CSL shares soaring 6.4 per cent to $312.05 - their highest level since late April when it last updated the market and leading to become the seventh best performer on the benchmark ASX 200 on Wednesday.

“I am pleased to report an exceptional result against a backdrop of complex and unexpected challenges brought about by the COVID-19 pandemic,” Mr Perreault said.

“Demand for our therapies remains strong, especially for immunoglobulins and influenza vaccines. Governments around the world recognise the capabilities CSL provides to the communities it serves are essential. As a result, our plasma centers and manufacturing facilities remain open and operational to maintain the supply of these medicines.”

Sales of its two main products in its immunoglobulin portfolio Privigen and Hizentra rose 20 per cent and 34 per cent respectively. Meanwhile, the company’s influenza vaccine business Seqirus reported an 11 per cent lift in revenue to $US1.297bn and a 70 per cent surge in earnings before interest and taxes as governments across the world sought to shield their citizens from flu outbreaks on top of COVID-19.

Meanwhile revenue lept 7.2 per cent to $US8.797bn.

But the COVID-19 pandemic has hit the collection of plasma - the main ingredient for many of CSL’s therapies - with donations falling about 5 per cent.

Milford Asset Management’s Portfolio Manager, William Curtayne, said the market has been concerned on the impact of weaker plasma collections leading CSL to “significantly underperform” against many healthcare stocks.

“If investors’ fears are overdone, then the stock could recover,” he said.

CSL was trading as high as $341 in February before falling to $270.88 on March 20 - a decline of 20.6 per cent. Still, it performed better than the ASX 200, which plunged 36 per cent over the same period.

Aberdeen Standard Investments head of Australian equities, Michelle Lopez, said CSL management was working to mitigate the risk posed by plasma collections during in COVID.

The company opened 40 new plasma collection centres in the US last financial year, bringing its total number to 277 with plans to open a further 20-30 centres in FY21.

“Going into the result we hadn’t heard anything from CSL since its April update and the world had changed materially since April and April/May that period was kind of the peak of the virus so there was a lack of clarity of where they’d come out,” Ms Lopez said.

“So the highlight was them delivering the guidance they provided back in April and secondly they are providing an outlook for FY21 - which in itself is probably a little bit below where the market numbers are at - but having that level of confidence and what that means to me is they have got a pretty good handle on the drivers of the business.

“To be able to provide that and given the risk around collections, which is a really big one, says to me that the management team of this business know the industry really well and is executing really well to their strategy.”

CSL will pay a final dividend of $US1.07 a share on October 11, bring the total 2020 payout to $US2.02.

CSL CEO Paul Perreault. Picture: Stuart McEvoy