The CSL Ltd (ASX: CSL) share price is in focus after announcing a partnership with VarmX for a potential total cost of US$505 million.
CSL is the biggest healthcare company in Australia with a presence in a variety of areas including vaccines and plasma therapies.
CSL’s blood treatment agreement with VarmX
The ASX biotech share said it has entered into an agreement with privately held Dutch biotech company VarmX to develop a new treatment to restore blood coagulation in patients taking a FXa inhibitor.
CSL noted that more than 20 million patients globally take FXa inhibitors as chronic anticoagulation therapy with approximately 3% of these patients experiencing severe bleeding or requiring urgent surgery.
The Australian company said that VarmX’s asset, VMX-C001, is a potentially first-in-class recombinant Factor X protein administered as a rapid single-dose, intended to bypass FXa anticoagulation activity and restore coagulation in patients experiencing severe bleeding or requiring urgent surgery.
How much will this cost?
CSL revealed that it will fund VarmX’s global phase 3 trial evaluating VMX-C001 in patients taking Factor Xa inhibitors. The company will also support late-stage product development manufacturing and pre-launch commercial and medical affairs activities.
The company will make an upfront payment to VarmX of US$117 million for an exclusive option to acquire the company and CSL will have the right to exercise the option after receiving the phase 3 data.
Subject to the exercise of the option, as well as certain milestones and regulatory clearances being reached, VarmX will receive payments of up to US$388 million up to the launch of VMX-C001, plus further commercial milestones after that.
Management commentary
The CSL CEO Paul McKenzie said:
CSL has a long history of working in hematology and bleeding disorders and partnering with VarmX strengthens our strategic ambition to deliver enduring patient impact.
This new treatment will potentially address a clear and significant unmet medical need in a well-defined and growing patient population. It also fits with our strategy of seeking more external partners to help accelerate our clinical and commercial pipeline through investments in validated, clinical-stage opportunities.
The preclinical and early clinical data are also very encouraging and led to the U.S Food and Drug Administration (FDA) granting Fast Track Designation, recognising VMX-C001’s potential to address a critical unmet medical need.
Final thoughts on the CSL share price
It’s an interesting move by the business and hopefully a positive boost for earnings rather than a sign the business is losing its leadership of research and development, needing to spend money to stay ahead.
I’m not a biotech expert, so there are other ASX growth shares I’d rather buy first because it’s hard to evaluate the company’s prospects and the competitive landscape.
