Over the last 10 years, the CSL Limited (ASX: CSL) share price has absolutely smashed the market.
During this time, the biotherapeutics giant's shares have posted an average total return of 18.58% per annum.
To put this into context, this would have turned a $10,000 investment into approximately $55,000.
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Why has the CSL share price smashed the market?
Investors have been bidding the CSL share price higher over the last 10 years thanks to its consistently strong earnings growth.
There have been a few key drivers of this impressive growth. Strong demand for CSL's existing therapies, earnings accretive acquisitions, and its lucrative research and development (R&D) pipeline.
The latter is underpinned by a material investment in R&D activities each year by management. And when I say material, I mean it.
Each year, the company reinvests in the region of 11% of its sales back into R&D. This meant an investment of over US$1 billion in FY 2022.
The good news is that this investment means there are plenty of potentially lucrative products on the way that could be the next drivers of growth. But what are they?
What will drive CSL's future growth?
Late last year, Citi commented on CSL's R&D event and highlighted CSL112 as one of the most important products under development. It commented:
The R&D budget is significant at US$1.16bn in FY22 or ~11% of revenue. CSL will continue to spend ~10-11% of revenue on R&D annually. The pipeline now includes assets from recently acquired Vifor with two assets in Phase 3. Our $340 [now $350] TP includes $22.40 for the R&D portfolio (down from $23 on delays) – the main asset remains CSL112 (cardiovascular) at $20/share on which we will get Phase 3 data in Q1 CY24. Maintain Buy, $340 TP.
What is CSL112? It is a novel apolipoprotein A-I infusion therapy to potentially reduce the risk of major adverse cardiovascular events (MACE) in patients with myocardial infarction (AMI). Completion of the trial is expected by the end of the year, which means that, if all goes to plan, it may not be too long until this therapy is generating revenue for CSL.
And what a lot of revenue it could generate! Some analysts estimate that CSL112 could pull in peak sales of US$3 billion. That compares to CSL's total FY 2022 sales of approximately US$10.13 billion.
What else?
And then there's CSL312, also known as garadacimab. This upcoming product has been described as a pipeline within a product by analysts at Goldman Sachs. It explains:
CSL312 is a humanised anti-factor XIIa monoclonal antibody in development for multiple indications including as a subcutaneous therapy for HAE [hereditary angioedema], with the potential for administration every 4 weeks (vs. every 2-3 days for Haegarda). Given its early position in the coagulation cascade, there is also potential application in various other disorders (including fibrosis, cardiovascular and inflammatory indications).
Catherine Milch, CSL's Vice President R&D Immunology, thinks very highly of the product. Milch said:
Based on the data published in The Lancet, we believe garadacimab has the potential to become a transformative first-in-class therapy, providing a new option where there is significant unmet need. The development of garadacimab reflects our commitment to providing life changing medicines for patients with HAE and for the physicians who treat them.
Overall, the future looks bright for CSL and its share price. Especially when you consider that the above are just two of a large (and growing) number of products in its pipeline.
