CSL shares dive after disappointing drug trial results

The news: Shares in CSL have dived in early trading on the ASX after the biotech giant suffered a setback in phase-three trials for a key drug candidate.

The numbers: CSL said the phase-three trial of its drug candidate CSL112 failed to show it could reduce the risk of major cardiovascular events at 90 days after a heart attack. As a result, the company has abandoned plans to seek regulatory approval for the drug in the near-term. CSL shares fell more than 5% to $289 on the news.

The context: CSL112 had been considered one of three potential blockbuster drugs by the company, due to its potential in treating second heart attacks, which account for a large share of cardiovascular deaths.

RBC analyst Craig Wong-Pan said the trial results were "disappointing" as there was a reasonable expectation that the drug candidate would be commercialised because CSL spent close to $1 billion on developing and testing it. However, he does not expect the company to suffer any material asset impairments because assets and production lines that were being prepared for manufacturing of CSL 112 could be largely re-purposed.