CSL (ASX: CSL) has announced an acquisition to the market this morning.
What is CSL?
CSL is Australia’s largest healthcare company, specialising in biopharmaceuticals. Founded in the late 1900s as the Commonwealth Serum Laboratories, CSL was sold by the Australian Government to Australian investors via the share market in 1994 at $2.30 per share, at which time it doubled its size through an international acquisition. CSL also split its shares 1-for-3. Meaning, the first investors’ true price was closer to just $0.77 each.
Nowadays, CSL is a global leader in blood plasma vaccines (think: the flu) and antivenoms, providing relief for potentially life-threatening medical conditions.
The acquisition
CSL has announced it has agreed to exercise its right to acquire Vitaeris, a clinical-stage biotechnology company focused on the phase III development of a treatment for rejection in solid organ kidney transplant patients.
The two healthcare businesses entered into a partnership in 2017 to accelerate the development of the program with the option for CSL to acquire Vitaeris in full.
The cost of the acquisition was described as “modest and does not materially change the company’s profit expectation for FY20.”
CSL also said that the acquisition includes sales based milestones and the company will incur additional R&D expenses associated with the completion of the phase III clinical trial. In FY21 these expenses will be between $30 million to $50 million.
CSL Executive Vice President and Head of R&D Bill Mezzanotte said: “Acquiring Vitaeris and their associate expertise helps us to continue to grow our strategic scientific platform of recombinant proteins and antibodies. We look forward to continuing to advance this treatment condidate as a potential option for people experiencing rejection, an area where current treatment options for transplant recipients are limited, at best.”
CSL must be fairly confident about the acquisition to follow through with the option.
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Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.
