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Why the CSL share price opened 2.13% higher on Monday

We examine the news that potentially contributed to the biotech’s run up at the open on Monday, 7 September.

CSL Source: Bloomberg

The CSL Limited (CSL) share price opened higher on Monday, after the company revealed it had signed an agreement with the Australian government and the UK-listed AstraZenecta to manufacture two separate Covid-19 vaccines – should their respective clinical trials prove successful.

Investors responded optimistically to this news at the open, bidding the stock 2.13% higher – to $285.00 per share. CSL however gave back most of those gains as the session wore on, last trading around $280 per share.

After hitting a 52-week high of $342.75 per share in February, CSL has proven volatile, trading to a low of ~$270 per share in March. Concerns over plasma collections and currency headwinds have continued to weigh on the stock.

CSL share price: details of the Covid-19 agreements

Looking at the specifics of today’s market update, CSL revealed that it had signed two heads of agreements (HOAs) – one with the Australian Government and one with AstraZenecta.

Under the agreement with the Australian Government, CSL has committed to manufacturing some 51 million doses – based on a two dose per person regime – of the coronavirus vaccine currently being worked on by the University of Queensland.

The company said first doses of this vaccine are set to be released by mid-2021.

'CSL has been working at pace to respond to the pandemic and has invested significant resources in the rapid development and large-scale manufacture of UQ-CSL V451, along with a number of other therapeutic programs,’ the company pointed out.

Early stage results from the University of Queensland’s Covid-19 vaccine have been described as promising, however it was noted that later stage success remains uncertain.

Assuming the University of Queensland's Phase 1 study is a success, it was noted that 'CSL will take full responsibility for the subsequent Phase 2b/3 clinical trial, which is expected to commence in late 2020.'

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AstraZenecta’s Covid vaccine in focus

Beyond the agreement with the Australian Government, CSL noted that it had also agreed to manufacture some 30 million doses of AstraZenecta’s covid-19 vaccine – also based on a two doses per person regime – which is set to become available in early CY21.

The company elaborated that the Australian government would provide funding to support CSL’s manufacturing efforts around AstraZenecta’s vaccine. The scope or amount of this funding commitment was not quantified.

'Acknowledging that CSL is the only company in Australia with manufacturing facilities capable of producing this vaccine, we thank the Australian government for their support,' CSL's CEO, Paul Perreault said.

Mr Perreault further added that:

'While there are still a number of milestones to be met, we are hopeful that by next year we'll be in the fortunate position of having a vaccine candidate to support Australia and the world's emergence from this crisis.'

As noted at the start, both Covid-19 vaccine manufacturing agreements are contingent upon the successful completion of clinical trials.

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