CSL Limited

Ladies and gentlemen, good morning and welcome to CSL's full year results call for fiscal 2023. It's Mark Dearing speaking, and joining me online is Paul McKenzie, CSL's Chief Executive Officer, Joy Linton, CSL's Chief Financial Officer, and Bill Campbell, CSL's Chief Commercial Officer. As with past practice, Paul will provide an overview of the results and operations, and then Joy will provide some additional detail on the financials. We'll then move to Q&A. With the view to giving everyone an opportunity to ask a question, could you please limit your questions to two? If you do have a further question, you are, of course, welcome to rejoin the queue. Please note this briefing is being webcast. And lastly, before we start, I draw your attention to the forward statement disclaimer contained in the slide deck. I'll now pass you over to Paul McKenzie. Paul.

Thank you, Mark, and good morning, ladies and gentlemen. Before I get into the results, I'd like to thank the entire CSL team and our partners for continuing to deliver for our patients. It is truly an honor to be given the opportunity to lead and continue to grow CSL. Our company has an important purpose to develop and deliver innovative medicines that help people with serious conditions live a fuller life and protect the health of our communities. I look forward to continuing to focus on executing our 2030 strategy, investing in innovation, and serving our patients around the world. I also look forward to seeing many of you over the coming weeks and months, and again at our Capital Markets Day in October. We have a lot to cover today, and I'm sure there will be plenty of questions at the end of the briefing. So now, turning to the results. I'm pleased to report that CSL has delivered an excellent result for fiscal year 23, driven by strong performance across all of our businesses. First, the headline numbers. Revenue was up 31% at constant currency. This includes approximately 11 months' contribution from CSL v4. NPAT-A, which is the measure we focus on as it reflects the underlying performance of the business, was $2.6 billion, up 20% at constant currency. Net profit after tax was $2.2 billion, up 8% at constant currency, and includes the one-off cost associated with the acquisition of CSLV4. In terms of the major highlights for the year, in the CSL bearing business, our IG franchise grew very strongly. Plasma collections are now at record levels, and we dosed our first patients in the U.S. with our gene therapy product, Hemgenix, a transformational treatment for those patients with hemophilia B. CSL Securus has continued to deliver strong sales growth, driven in particular by flu-cell vacs. CSL Securus also announced a license agreement with Arcturus Therapeutics to access their next generation mRNA vaccine technology. For CSL v4, we successfully closed the acquisition in August 2022 and had approximately 11 months contribution to this fiscal year. The integration of CSL v4 is well advanced and our cost synergy objectives are on track. In R&D, we achieved a significant milestone with the last patient enrolled in our CSL112 Phase III trial. And preparations are well underway for global regulatory submissions for Gardadecimab, our homegrown monoclonal antibody for the treatment of HAE. Now we'll focus on CSL bearing. Overall, CSL Bearings revenue was up 12% at constant currency. As I mentioned, our IG franchise grew strongly. Sales were up 21%, with strong growth recorded across all geographies as global supply recovered significantly. Our IV product, Privagen, was up 29%, and our subcutaneous product, Hisentra, was up 12%. Underlying demand for IG continues to be robust, and patient diagnosis rates have been growing in core indications. We received approval and are actively prepping for the launch of our 50ml pre-filled syringe for Hisentra, which is another advancement for our market-leading subcutaneous product. The increase in supply also saw our albumin portfolio grow by 11%, with strong growth in China as the COVID restrictions there eased and hospital operations started to return to more normalized levels. We have also had solid demand growth in both Europe and the U.S. Hemophilia was up 8%, where once again the standout performer was Adelvion, which was up 13%. This was driven by increased patient interactions with our healthcare providers. Adelvion also saw increased uptake in Japan. Specialty products were up 6%, led predominantly by K-Centra, which increased by 10% as social mobility increased post-COVID. The other category for CSL Bearing was down 15%, largely due to the prior period, including COVID vaccine sales. Let's get to the operating highlights for CSL Bearing. We have continued to achieve strong growth in plasma collections with volumes up 31% for the year and now at record levels. The other pleasing aspect of our plasma collections is that during this growth period, the CSL plasma team have carefully been reducing collection costs. our cost per liter, or CPL, over the year has been managed down by approximately 14% from June 2022 to June 2023. CPL, which is largely made up of donor fees and labor costs, has reduced by approximately 17% from the peak in March 2022. This is a great achievement and reflects the focus and dedication of all of our employees in CSL Plasma and the commitment of our donors around the globe. While significant progress has been made to grow our plasma collections to record levels, reduce our costs, and improve our efficiency, there is still a lot more to do, and we will be driving hard to continue this positive momentum. We have continued to invest in new plasma centers with 12 new centers open during the year. As you know, the Mexican border was reopened to donors in September 2022, and our centers near the border have been recovering strongly. We have also continued to embrace and advance digital technology in our plasma collection centers to improve the donor experience. The CSL Plasma Donor App has undergone further enhancements with over 3 million user downloads and more than half a million users logging on each month. We have used digital marketing campaigns with targeted messages to attract new donors, reactivate lapsed donors, and encourage donors to return. As mentioned at our half-year results, we have commenced the rollout of our new Ricca plasmapheresis devices. These are now installed at a limited number of centers, and we continue to work through supply chain challenges with Tarumo. We remain committed to the rollout of this program. However, it is taking us longer than originally thought as we iron out these issues. On the manufacturing side for CSL Behring, we opened a new plasma fractionation facility at Broadmeadows and added new base fractionation capacity at our Marburg facility in Germany. Both of these expansions will help us meet the increasing demand for our plasma-based therapies and improve manufacturing efficiencies over time. We also have a number of initiatives underway to increase our manufacturing yields in the plasma production processes, and I will talk more to this later in the presentation. Moving on to the next slide and our CSL Seqirus vaccines business. CSL Securus delivered another strong result, with total revenue exceeding $2 billion for the first time, a growth of 9% at constant currency. Seasonal influenza vaccines, which make up 90% of CSL Securus sales revenue, was up 9%, driven by the outstanding performance by flu cell vacs, which was up 30%. This growth by CSL Securus was achieved against a backdrop of reduced rates of vaccinations as communities around the world adjust to a post-pandemic environment. Considering this broader environment, CSL Securus' growth has been extraordinary, and we continue to benefit from our differentiated product portfolio. Here are a few of the operational highlights for CSL Securus. Flu Selvax has now been approved in U.S., Argentina, Canada, Taiwan, and most recently Australia and New Zealand for six months plus age indication. For Fluad, the CDC adopted the Advisory Committee on Immunization Practices, or ACIPS, recommendation for it to be one of the preferentially recommended seasonal vaccines for adults aged over 65 in the U.S. This preferential recommendation provides us with the opportunity to better educate healthcare professionals, pharmacy partners, and patients on the benefit of adjuvanted influenza vaccines, which are designed to protect the immune system of older patients. On the pandemic side of the business, CSL Securus was awarded a bar to order for the manufacture of avian influenza clinical trial material. We renewed or extended advanced purchase agreements with Finland, Canada, Austria, and Sweden. And we also supplied our pre-pandemic stockpile of avian flu to Singapore. In relation to mRNA, we signed a licensing and collaboration agreement with U.S.-based Arcturus Therapeutics, which gives us access to their next-generation vaccine technology platform. This includes their late-stage COVID-19 vaccine and gives us an R&D development program beyond influenza capability. On the manufacturing side, our innovative cell reassortment technology is delivering high yields in our manufacturing processes. Our additional fill and finish capacities we built at Holly Springs and Liverpool are now fully operational. Building works are well advanced for the new cell culture influenza facility in Telemarine, which is expected to be operational in 2026. Turning our attention to CSL V4. As I mentioned at the beginning, our acquisition of V4 Pharma successfully closed in August last year, which means approximately 11 months contribution from CSL V4 in fiscal year 23. The integration of CSL V4 is well advanced and the cost synergy targets are well on track. CSL V4's revenue for the period was just shy of $2 billion. We don't have a prior period to report against, but based on unaudited management accounts, CSL V4 performed in line with our expectations, with revenue growth of approximately 14%, reflecting solid growth across all key product areas. The growth in fiscal year 23 was driven by strong performance of pharyngect outside the U.S., strong growth in mesera following an agreement with a large kidney care provider in the U.S., which took effect in January 2023. The step-edit measures introduced by payers in the U.S. iron market had a positive impact on Venifer, CSLV4's low-dose IV iron product, but put pressure on the high-dose IV iron product, injectifer. However, there are signs that this pressure is starting to stabilize. Other highlights for the period include... For the iron business, Injectifer was approved in the U.S. for the treatment of iron deficiency in adult patients with heart failure, categorized as New York Heart Association Class 2-3 to improve exercise capacity. Ferrinject also gained marketing approval and was launched in China, with patient reimbursement expected in early 2024 following the national reimbursement drug list submission. For Veltassa, we have signed agreements with both Humana and CVS in the U.S., Capruvia, which is used to treat itching in patients with chronic kidney disease on dialysis, was successfully launched in Germany and other European countries, as well as a long-term licensing agreement signed for Kursuva in China. In the non-dialysis part of the nephrology business, Tavanos, a treatment for patients with severe active ANCA-associated vasculitis, saw strong sales growth, especially in Germany and the UK. It gained reimbursement in France, and we have seen continued uptake in Japan. Moving on to our R&D outcomes. This slide shows the key R&D portfolio events which were achieved in fiscal year 23. In immunology, we presented Gardadecimab's HAE Phase III study data for the first time at the 2023 American Academy of Allergy, Asthma, and Immunology Annual Meeting in February. These data are consistent with the positive top-line results announced in August last year, and we have also commenced regulatory submissions to global health authorities. Baronert subcutaneous for HAE received PMDA approval and was launched in Japan. This approval of the at-home subcutaneous therapy for patients suffering from HAE advances treatment options for patients in Japan. In hematology, Hemogenics, as mentioned earlier, the first and only one-time gene therapy for appropriate adults with hemophilia B was launched in the U.S. with the first patients receiving commercial product in June. Kcentra trauma phase three study, first patient in, was achieved in March 2023. In our respiratory therapeutic area, CSL 787 phase one study is complete without any emerging safety findings and some promising efficacy trends. CSL 787 is a novel approach to use IG via inhalation. This is a potential novel therapeutic option for patients living with bronchiectasy. In cardiovascular and metabolic, enrollment in the CSL112 AGES II trial was completed in November 2022. There is a 12-month follow-up after which data will be unblinded and analyzed prior to the release of the final results in early 2024. In vaccines, we have completed our AQIVC Phase II dosing studies. and are on track to commence phase three with the Northern Hemisphere season. Arcturus 154 COVID vaccine global submissions commenced in May 2023. For CSLV4, as mentioned on our previous slide, we received approvals for injectifer in the U.S. for heart failure. Ferrinject and Valforo have been approved in China. We have also received approvals for Kursuva and Capriva in multiple countries, including Switzerland, Canada, Singapore, Australia, United Arab, and Kuwait. I hope you share our enthusiasm for the progression of the R&D pipeline. I will now hand over to Joy for some more in-depth details of the financials.

Thank you, Paul, and good morning, everyone. As Paul indicated in his introductory comments, CSL has delivered a strong performance, slightly above the top end of our guidance. On a reported basis, full year NPAT A was $2.61 billion, up 10%. On a constant currency basis, NPAT A was $2.855 billion, up 20% after adjusting for a currency headwind of $245 million. I'll talk to FX in more detail shortly. As you've heard me say before, we believe NPAT-A provides shareholders with greater transparency as to the underlying performance of the company. Once the one-off V4 transaction-related costs have washed through the P&L, the acquired IP amortisation will, for the most part, be the only reconciling item between NPAT and NPAT-A. The statutory net profit after tax measure is, of course, provided as usual. I do want to highlight that unless otherwise called out, references to NPAT-A are attributable to CSL equity holders only, and the financials in this presentation are inclusive of approximately 11 months' contribution from CSL v4, which of course affects almost every line item. On this slide we provide a reconciliation between NPAT-A and NPAT at constant currency. Starting with NPAT-A of $2.855 billion, the following adjustments are included. $239 million attributable to amortisation of acquired intellectual property. Other one-off acquisition costs of $346 million, which is made up of the acquisition transaction and integration costs and the unwinding of the inventory fair value uplift recognised on acquisition. This is a non-cash item and a result of the PPA exercise. Each contribute to approximately half of the overall balance. After adjusting for non-controlling interests and tax, NPAT attributable to CSL shareholders for the full year is $2.441 billion. Just a couple of observations before turning to the next slide. If you'd refer to note one of the financial statements, we have provided additional commentary on the NPAT A to NPAT adjustments. And while we're on the financial statements, I'd like to draw your attention to notes two, and node 8 and here we show the V4 goodwill allocation across the CSL group. This simply reflects where the value will be created by the V4 acquisition with the allocation following where the actual benefit will be realised. Now turning to the group financial highlights on slide 13 and looking at the financials in more detail. On a constant currency NPAT A basis, with strong growth in the IG franchise and the inclusion of approximately 11 months of CSLV4 financials, total revenue for the group was up 31% to $13.826 billion. And we provide a breakdown of our major products in Appendix A and B of this presentation. Gross profit of $7.587 billion was up 32%, and I will talk to gross margin shortly. The 58% increase in sales and marketing costs is largely attributable to the incorporation of CSL V4 into the group, with CSL bearing and CSL at securest costs as a percent of revenue largely in line with the prior year. Group operating result was up 27% or $6.072 billion, and the segment split follows on the next slide. Research and development costs were up 22% as we advanced assets such as Garidacimab, CSL112, Hemgenics, along with the inclusion of the CSLV4 R&D activities. We expect that F524 total spend for R&D will be in the 10% to 11% guidance envelope of total revenue as we continue to invest in innovation and have a number of exciting programs coming to fruition that Paul has already outlined. General and administration costs excluding CSLV4 acquisition-related adjustments of $177 million was up 27%. And again, this is primarily driven by the 11-month contribution of CSLV4. Net finance costs increased due to the debt associated with the CSLV4 acquisition, as well as rising interest rates. On debt, our weighted average cost of debt increased by 73 basis points to 4.11%. As previously mentioned, NPAT A attributable to shareholders of CSL was up 20% at constant currency. Of note, this does include a 49 million NPAT A contribution from the sale of a property. This contribution is largely the reason that NPAT A was over the top end of our profit guidance provided last year. The reported effective tax rate for the fiscal year 23 declined to 15.5%, mainly due to the geographic profit mix and the CSLV for lower statutory tax rate. We do expect for fiscal year 24 the effective tax rate to be in the range of 18% to 20% at constant currency. ROIC decreased to 12.2%, primarily related to the acquisition of V4, with the benefits materialising over the coming years. Cash flow from operations was $2.601 billion and remained relatively flat year on year. The strong cash earnings growth was offset by the growth in plasma collections, one-off V4 transaction costs, along with a currency headwind. NPAD-A EPS was up 17% at constant currency or 6% reported and in line with our total dividend of US dollar $2.36 per share which also grew 6%. This translates to approximately $3.59 Australian which is up 13% on the previous year given the strength of the US dollar. Turning to the segment results on slide 14. Fiscal year 23 is the first full year of our new segment reporting. And as we have previously communicated, this reflects the way that the Chief Executive Officer, who is the Chief Operating Decision Maker, monitors and assesses business performance in order to make decisions around resource allocation. And this is in accordance with the accounting standards. There are very sound operational reasons as to why we've made this move. It reflects our organisation structure and we garner valuable expertise, scale and efficiency benefits by amalgamating the basic frameworks of what we call our enabling functions as well as our R&D organisation. This includes our scientists, lawyers, accountants, HR professionals, etc. And I'll talk to the financial benefit of this a little more shortly. As you can see on the slide, total revenue for CSL Bearing and CSL Securus was up 12% at constant currency from strong IG sales in CSL Bearing and the ongoing shift to differentiated products in CSL Securus. With the addition of the 11 months contribution from CSL V4, where both Ferenject and Mocera performed strongly, total group revenue was up 31% at constant currency. As you know, the total cost of collecting plasma right across the industry has risen significantly over the past few years. And together with an inflationary environment and a currency headwind, all of these factors have adversely impacted the CSL bearing gross margin. And I will talk to this in more detail on the next slide. Fundamentally, however, today's margins reflect the cost of plasma 9 to 12 months ago as the cost of that plasma works its way through inventory until it is sold a year or so later when it is reflected in the cost of goods. Switching over to CSL Securus, gross margins expanded due to the continued success of our product differentiation strategy and the improved manufacturing efficiencies driven by the cell reassortment technology delivering higher yields. And lastly, the addition of CSL V4 has a modest but positive impact on the group's margin. The group segment operating result was up 27%, with the integration of CSL v4 into the CSL group now substantially complete. Turning to the next slide and the CSL bearing gross margin. We continue to expect the CSL bearing gross margin to return to pre-COVID levels in the medium term. The path to margin recovery, however, is different to the COVID-driven margin decline. And the key contributors to this margin recovery are depicted on the slide. You can see each chevron has a different size and is broadly representative of their contribution to margin improvement. With the bigger the chevron, the greater the contribution. But please do not take your rulers out as this is not to scale. Let's start with the largest contributor to gross margin improvement, CPL reduction. The largest components of CPL are donor compensation and direct labour. These two combined equate to approximately 65% of total CPL. The remaining is a mix of leasing costs, consumables, testing costs and other costs associated including fixed infrastructure. Some of the major initiatives that we have implemented include optimising the structure for donor payments, testing of different fee schedules, improving labour, planning and initiatives to drive increased centre level productivity. And as Paul stated, CPL is about 17% off the peak, so we are making genuine inroads, but there is more to do and it is just going to take some time. New products. We have and will continue to be an innovative company. The R&D portfolio is progressing extremely well and we believe it's the best shape it's ever been in. There are a cluster of late stage programs coming to fruition and these are high value products meeting patient needs. Hemgenics is Exhibit A, and Garadasabab is not far behind. Notably, our modelling on this slide, we are excluding any contribution from CSL 112. Moving to the next chevron, ASP Mixshift, and this is both geographic and by-product presentation. We have seen over the last few years is a geographic mix shift. The difference between US and ex-US pricing has been declining for several reasons, and we expect this dynamic to continue. I don't want to over-index on this point, as we don't expect this gap to close completely, given the different nature of the various markets around the world. But it is a trend we expect to continue. Another ASP mix shift dynamic is that of product presentation. There is a long-term shift towards subcutaneous IG, a premium product with a higher price. And while we haven't seen this in fiscal year 23, we do expect this trend to return over the medium term. Yield improvements. IG yield improvement has and continues to be important. It is highly value-creating and an enterprise-wide focus. And Paul will talk to our IG yield maximisation strategy in greater detail in a few moments. And lastly, scale and efficiency measures. When compiling our long-range planning, we think of high single-digit IG demand growth. And this is essentially why we have maintained investment in our manufacturing capability and we continue to have confidence in this. Plasma collections are now comfortably exceeding pre-pandemic levels. Our manufacturing facilities are now operating at higher utilisation rates reducing the fixed cost per unit. Of course there are possible headwinds to margin expansion that are not detailed on this slide. For example, all else being equal, growth in IG and albumin for that matter, deliver valuable gross profit in a dollar sense, however they are a drag on the gross margin percentage. But broadly speaking, the last litre of plasma we collect is the most expensive and the last gram of IG and albumin sold is at the lowest price. These products are marginal litre products and we do expect them to continue to remain in balance over the medium term. Whilst FX has been a margin headwind in FY23, going forward, of course, this could be a headwind or a tailwind as currency pairs move. But bringing this all together and keeping in mind the nine to 12 month inventory cycle, we anticipate modest improvement in the CSL bearing gross margin in fiscal years 24 and 25 with a return to the pre-COVID margin in the subsequent three years. So moving on to the next slide. I alluded earlier to the rationale as to why as a business we have moved to a new segment reporting. And I think this slide clearly illustrates the value that our new organisational structure creates. As you can see, even as we grow revenue, G&A expenses as a percentage of revenue have been declining. This follows the work we have done over the past few years to bring together our enabling functions into a single global structure and this has precipitated the move to our new segment reporting. The journey to transform our enabling functions across the enterprise started about three years ago and it is now a centralised and globally managed. This removes duplication, it improves the ability to automate, improves our corporate governance and has been deployed among multiple functions such as INT, finance, communications, human resources, legal and procurement. And we anticipate being able to drive further operating leverage as we embed these progressive changes deeper within the CSL group. Moving to slide 17 and inventory. Here you can see the various components that make up our inventory levels, split between raw materials, work in progress and finished goods. It's important to note that CSL V4 is included for the first time in the fiscal year 23 breakdown. While the graph clearly shows the growing value of inventory, which is consistent with the growth in the overall business, it also reflects the increase in our cost per litre of plasma. Despite the growth in inventory you can see as a percentage of revenue, inventory has essentially remained flat for many years. Focusing on the last couple of years, you may recall that we have had to judiciously manage the tension between patient demand and balancing our supply chain. This has resulted in us having a lower cover of finished goods than we would like, which largely remains the case. Turning to capital expenditure on slide 18. For many years now, CSL's capital investment has been significantly orientated towards supporting company growth, with our major capacity projects completed at both CSL Bearing and CSL Securus manufacturing facilities. And I know many investors had a firsthand opportunity to visit some of these facilities at our recent European site tour. Albeit we will continue to need to reinvest into the company, CSL is currently well placed to meet demand growth in the near term. for capacity on both collections and on the manufacturing front. We have worked hard to continue to build new manufacturing capacity at all our facilities to support product launches and meet future demand, while continuing to balance both capital investment and yield improvement initiatives. CapEx as a percentage of revenue has dropped considerably since fiscal year 20 and will further reduce in fiscal year 24. Fiscal year 24 CapEx is expected to be circa $800 million, around a 30% reduction on fiscal year 23. We are strongly focused on the return on our capital projects as we aim to extract as much value as we can from our investments. Next year, the reduction in CapEx combined with the expected profit growth will obviously help improve our ROIC and I will be giving some more granularity on this at our Capital Markets Day in October. Innovation also plays a key part in managing capex. The IG yield improvement initiatives underway both in collections and finishing reduces the need for future capital. And it's also worth noting that yield innovation goes beyond IG with initiatives for yield improvement in albumin as well as cell culture for influenza production also in flight. So moving to the next slide, foreign currency. There has and remains significant volatility in world currency markets, and CSL, being a global company, is not immune to this. For fiscal year 23, the NPAT-A currency headwind of $245 billion was largely driven by the stronger US dollar and is a function of both realised and unrealised losses. To the left of the slide, the waterfall chart highlights the currency pairs contributing to the headwind, with the Chinese yuan, the pound sterling and the euro all weakening against the US dollar and contributing the most to the $245 million headwind. The US dollar against the Chinese yuan relates to albumin. The US to the euro reflects the full range of plasma products sold into the EU, but particularly IG inventory being built back post-COVID. The adverse movement of the pound sterling against the US dollar is different, as our UK's securest business is a pound sterling functional currency entity. The currency headwind is a by-product of the production of Fluad in Liverpool, which is then sold into the US and then settled at a later date back into pound sterling. Remaining on the left, the currency average rate table highlights the volatility in the major currency pairs, with the US dollar strengthening against most currency pairs upwards of about 8%. Switching to the right-hand side of the slide, the 245 million FX headwind is broken down into FX impact by type. And here you can see that transaction FX has been the largest contributor. The realised, unrealised FX, where realised is the difference in the FX rate from the date of transaction to the date of settlement, or in the case of unrealised, the closing rates as at 30 June. This contributed significantly to the FX headwind with the US dollar strengthening against most currencies during the year. There was also a modest translation impact. You will also see that we have included a footnote on the outlook slide to provide you with the current estimated FX impact for FY24 should rates remain steady for the remainder of the financial year. And at this stage, we see no material impact on our NPAD-A guidance. And we will continue to provide updates to you during the year, such as at our AGM and the half-year result. And with that, I will hand back to Paul, who will finish up with some comments on our IG yield maximization strategy and the fiscal year outlook for 24.

Thank you, Joy. As mentioned earlier, we have a number of yield initiatives underway across the group. On this slide, I'd like to concentrate on CSL bearing and give you a roadmap of our IG yield maximization strategy. As you know, increasing the amount of IG that we extract from every liter of plasma has been and will always be an area of high focus for CSL. We have been on this journey for some time, and it is an area in which we believe we have a competitive advantage today. Starting off with the green arrow on the bottom left corner of the chart, we have used the pre-COVID period as our baseline. Since then, we have achieved IG yield growth of approximately 5% to get us to where we are today. The next stage of our journey is about working within the current regulatory framework to continue to increase IG yields. Over the next five years, we will be doing this by using data analytics, by being smart about the way we allocate plasma, and implementing a program of operational excellence and process changes to our existing practices. We are targeting another 5% improvement, and we're labeling this or calling it Horizon One. Horizon 2 will build on Horizon 1 and run concurrently. Horizon 2 will involve proprietary process improvements with some manufacturing retooling required. This will give us a step change in the amount of IG that we extract from every liter of plasma we collect. Work is currently underway and we have the pilot plant up and running for this new process. This will require regulatory approval. For competitive reasons, we don't intend to go into the detail about the how. Our target for Horizon 2 is to achieve another 10% improvement in our IG yields on the top of Horizon 1 improvements within a timeframe around the back end of the decade. Now on to the outlook. the company continues to have a strong midterm outlook. We also continue to have a robust pipeline of R&D programs coming to fruition. Looking specifically at CSL Bearing, the strong growth in IG is expected to continue following the record plasma collections in fiscal year 23. We look forward to rolling out hemogenics to more patients in the U.S. and Europe. And as I outlined, we have a number of initiatives underway to improve efficiencies which will support the recovery and CSL bearings margin over the medium term. For CSL VFAR, our focus is on organizing ourselves to unlock the value and growth within this business. a business we are yet to fully leverage the value of the broader CSL network. The iron and nephrology markets are evolving, and I have no doubt there will be challenges in the CSL v4 growth profile, but the unmet patient need within these markets is significant, and CSL is well-placed to respond in an agile and proactive way. One example of our activity that leverages both CSL Bearing and CSL V4 is our work on patient blood management. Herve Gisereau will be talking more on this initiative at our forthcoming Capital Markets Day in October. For CSL Securus, we anticipate another strong year with continued growth driven by demand for its differentiated product portfolio. CSL Securus is also progressing global registrations for its next generation mRNA COVID vaccine. In terms of our guidance for fiscal year 24, it remains consistent with what was provided at our market update in June. We expect revenue growth to be approximately 9 to 11 percent over fiscal year 23 at constant currency, with NPAD-A expected to be in the range of approximately 2.9 to 3 billion at constant currency, a growth of between 13 and 17 percent. This percentage growth rate excludes the one-off gain we made from the sale of property in fiscal year 23 of 44 million. With that, we'd be happy to take your questions.

Thanks, Paul. Ladies and gentlemen, the Q&A. Our first question comes from Leanne Harrison at Bank of America. Go ahead, Leanne.

Hi, thank you, Mark. Good morning, Paul. Good morning, Joy. Congratulations on the strong growth in IG and collections. And I know CSL usually waits on its R&D day to comment on pipelines. But given the progress in FCRN, can you comment on the status of CSL730, which a public clinical trial record is showing that that candidate has been terminated? And if so, can you also comment on what CSL has in the pipeline in response to FCRN?

Well, thanks very much for the question and look forward to seeing you, Leigh Ann. You know, our CSL730 program, as you mentioned, was terminated. We didn't really see a clinical viable option with that program. We are looking at our next generation in our R&D group of FCR inhibitor candidates that we're really going to move and progress efficiently. But I want you to note, Leanne, IG is and will continue to be the standard for things like CIDP where FCRN is playing. And we really want to make sure that people understand that patients who are well maintained on IG portfolio are very happy with this. Over 96% of the patients on our IG portfolio are either very happy or happy with their doses. So this is fantastic. So we do welcome innovation for patients around the world, but we think the results we've seen to date are at par, at best, with our portfolio of innovative pipelines that we provide, and we continue to look forward to serving this marketplace as we move forward. But with that, I'll hand off to Bill Campbell, who may want to add a few more comments.

Hi, Leanne. Good morning. Nice to talk with you again. I think there's not a lot more I would add to Paul's, I think, excellent comments. I think, first of all, I think it will be helpful in the market to have another voice talking about CIDP and working toward more patient diagnosis, which tends to be quite undervalued at this point in time. IG without a doubt has been and will absolutely continue to be the standard of care. I think it's highly unlikely at this point where you'll see many patients move off of IG to another product. Given the long lead times around diagnosis and then ultimately how well patients are doing on therapy. We continue to bring other innovations such as our pre-filled syringe enhancements to Hyzentra that Paul spoke about. So I think we will continue to be an aggressive leader in this space. It is a market where we've been in for, as you know, a long time, ex-U.S., and more on the five- to six-year range in the U.S., but have built really strong relationships with the neurology community. And then the last thing I would say is there is a preference for subcutaneous therapy for ongoing maintenance in the space. Subcutaneous IG therapy, I should say, where Hyzentra will remain the leader in that area. I think, you know, it's good overall to have more voices talking about this and moving diagnosis along, but we feel we're in a very, very strong position.

Thank you very much.

Thanks. Thanks, Leanne. Next question comes from Andrew Goodsell at MST Marquis. Go ahead, Andrew.

Thanks very much for taking my question. I was just going to ask about the sales process. of IG, I guess you've got 30% more plasma, I guess in the hopper and just trying to see how you think about balancing that with where post COVID demand has recovered to or where it's recovering to and your inventory rebuild.

Yeah, so let me comment, and again, I'll ask Bill to weigh in. But if you think about where we're at in terms of the IG demand overall, IG demand is growing back very strongly. We see on diagnosis in the U.S., for instance, where we reported at half-year about 70% return of diagnosis rates to pre-COVID. We're now over 80% and continuing to build. So the IG market itself is rebuilding. And we continue to be bullish on the fact that it will grow at high single digit or low double digits moving forward, which is incredibly important. I know in terms of the plasma collections, people immediately want to say, well, your IG growth should be tied exactly to your plasma collections. But that's not as easy when we're looking at one rebuilding inventory across many SKUs around the world. bidding on more tenders that require us to have more of an inventory in place. So months of coverage is really not always the best parameter for measuring inventory because we need to get down to SKU levels. As I mentioned and Bill mentioned, we are also prepping for the launch of the 50 mL Hyzentra syringe. So that will take some work to kind of build that supply chain and make sure we have that distribution network there. So a lot of the plasma collections that are there will go to inventory and will go to make sure that we can meet all the demands of the SKUs. And just by SKU, I mean the individual product presentation, strength, dosages, labeling that occurs around the globe. But with that, I'll ask Bill to make any additional comments.

Hi, good morning, Andrew. Again, also good to speak with you. First of all, I'm super proud of the effort that the bearing team put forth in FY23. As you saw, the IG business was up quite substantially, 21% overall. As is in our past, the large percentage of that is volume-based. I would also say that the growth for us was strong across all four of our regions, which is something, as you'll know, that I've spoken about quite extensively in the past. And we believe continuing to have a broad base of businesses in our strong, good, long-term health. So really strong growth this year. We foresee the growth to be quite significant going forward as well. And if you perhaps were asking a little bit about FY24, It's a bit early yet in the year, but certainly see mid-teen growth on volume and lower percentage, obviously, on price. I think we're in a really good position with both Privagen and with IG. The thing I do want to... Just add on to Paul's commentary is inventory is really important for us. We've been, as you know, we're a bit hand to mouth going through COVID. We took a bit of a conservative but appropriate approach to make sure that patients on our brands continue to receive our brands going forward. And building inventory back up to ensure the growth will be important for us. Last comment I'll make is I can promise you the commercial teams around the world are quite Quite anxious to get after more IG volume after being a bit restrained in the last couple of years, so they're pretty excited and. And that goes from the US team through Asia, Europe and rest of world. So I like Paul quite confident in the growth of our IG business and I believe that that will continue for quite quite some time.

Thank you. I don't know whether we have time for the follow-up, but I'm just going to ask on RECA whether there's – sorry, when you expect that to reaccelerate and get rolling out again.

No, thanks for the question. We've been working hard on solving some of the challenges we have with RECA. We're now into just over 10 centers. We're continuing to be impressed with what we're seeing in terms of the system itself. the benefits for donors in terms of donor safety, in terms of the total amount of plasma outside the body, as well as donor time on the bed. In addition, we've been very happy with the employee experience around the machine. Our challenge really, Andrew, has been around making sure the supply chain challenges get resolved. Remember, we're at an all-time record for plasma collections right now. We want to make sure we're very cautious in how we introduce the machine to not end up with any major disruption. So we see a critical period here in the end of the calendar year where lots of the supply chain issues, them also including not just soft goods that we talked about before, but some spare parts for the devices themselves, some software updates and hardware updates all come together for us to drive the overall reliability of the machine. So we should be able to provide you at the half year a very strong visibility to where we're going and how aggressively we can roll it out after this critical end of calendar year activity.

Good. Thanks, Andrew. Next question comes from Sean Larman at Morgan Stanley. Go ahead, Sean.

Thank you, Mark. Good morning, Paul and Joy. Hope everyone's well. Thanks for the detail on some of the dynamics around the gross margins. You've got 31% growth in volumes. You're still rolling out collection standards that are much more late than you have done over the last years. You do expect that the mix will return to higher price ties entry, and you've got this yield kicking in where you're currently above 5% ahead of pre-pandemic levels. So you get some confidence that you will indeed get back to that gross margin that you had pre-pandemic in bearing. But then when you think about some of the more larger yield improvements, just mathematically in the latter part of the decade, if you were, for example, producing the same amount of product that's taking 20% less plasma to achieve that outcome, why wouldn't we expect something like north of mid-60s gross margins?

Yeah, no, it's a great question. Thanks. I'll make some comments and also ask Joy to weigh in. You know, look, the return to gross margin of pre-COVID is a journey, as Joy outlined, right? We're continuing to pull out all stops across all the chevrons that Joy had highlighted. One thing I want to note on the yield improvements. Not every leader goes through the yield improvements that we showed on the Horizon 2. So that is really focused on, in this period, on the leaders that are used to produce IG and albumin only, because what we do not want to do is change the regulatory path of our existing products and inframarginals. So when you look at it, you can't apply it to all the plasma leaders we collect. You have to apply it to the part that is really driving the marginal leaders of IG and albumin. Now over time, we may be able to go back and move that, but in the period that we showed on the graph, and given all the regulatory approvals and work that needs to be done, it's unlikely we'll get to all plasma being put through that new proprietary process. Joy, I don't know if you want to add any comments.

Agreed, Paul. And, Sean, the only other thing I would say is, of course, once the yield improvement comes in, you still then need to probably wait till the following financial year, given the lag between, you know, the manufacturing process and actually selling the product. So that slide that kind of talked about the end of the decade, you know, you've then got to put another nine to 12 months on that slide before it really starts to come through margin. So that's the only other thing that I would caution you on. And of course, IG and albumin, they remain lower margin products. And the growth that we've had in the EU, at least in 23, you know, was a bit of a margin headwind for us. But it was the right thing for us to do, building back, preserving those markets. And as I said, we actually see that will turn into a positive in the next period of time. But so, you know, there's some headwinds and tailwinds, but we remain confident on returning to pre-COVID and, you know... I'm sort of loathe to make statements that go out too far beyond that. But, you know, put it this way, there's many more tailwinds than headwinds, which is what we're seeing, which is positive.

Yeah, Sean, maybe if I could add one comment on the CPL, obviously, the biggest chevron. Right, it's really a balancing act. We're trying to thread the needle between... continuing the journey of CPL reduction and making sure we collect the right volume of plasma for growth in future years, right, fiscal year 25, 26, 27. So it's not like we can just immediately cut the CPL. It's a journey to do that in both donor fees as well as labor costs to make sure that we continue to collect the right amount of plasma. We will be open tonight to your comment. double-digit plasma centers for this year and continue to look at can we diversify our footprint relative to plasma, which hopefully we'll have more news on in the upcoming results.

Got it. And just one very quick follow-up. Is there any impact on costs or gross margin related to having to extend with heminetics while carrying out the RICA process?

There is not, Sean. Basically, we pay for consumer good, either RICA or consumer good, humanetics, and we've been able to work with both of them to make that roughly at par.

Perfect. Thank you. That's all I have.

Good. Thanks. Thanks, Sean. Next question comes from Steve Ween at Jardin. Go ahead, Steve.

Thanks, Mark. Good afternoon, everyone. I just wanted to sort of take that donor fee discussion a little bit further. Just wondering where the fees that you're offering donors at the moment sits relative to your peers, because obviously they seem to have made some headwind there and I'm just trying to compartmentalize that particular aspect of your cost base and how much further it could come down if you're going to move towards what your peers are doing.

Yeah, I think if you look at our overall CPL, like I said, we're down 14% year-on-year and 17% overall from our peak. It's really a market-specific problem. opportunity relative to donor fees and what competition is doing, right? So we've done a series of things, you know, moved from eight donations to five donations, put in bonuses. Each marketplace has its own unique dynamic, though. So in some cases, like the Mexico border, I was down there a couple weeks back, you see the competitors being very aggressive with price there. but not as aggressive in other parts of the U.S. And so we really have increased our competitive intelligence of what the donor fee mix looks like, and then we respond to that by using the data analytics and our donor app to be able to get the right mix of donors that we can attract remember it's a mix of new donors which are running about five percent right now and returning donors so it's it's really about getting that information we've rolled out a customer management tool a CRM a tool that bill and his team uses extensively in commercial so we can continue to understand the personas of our donors and to make sure that we can enhance their experience, but as well continue to move the journey of CPL reduction. So, you know, we've made really good progress on this, on both donor fee and also labor costs, but again, as I shared, we want to thread the needle in terms of not cutting back on plasma total liters relative to our growth aspirations for patients specifically to IG.

I might just add a couple of comments, Paul, and agree with what you say. The two additional bits I would add, Steve, is based on our data, we were never as high as some of our competitors. So we didn't have as far come down. We never chased up to the top end, and I think that's important, and we think across both of our major competitors that statement we believe is true. And secondly, as Paul alluded to, we've got some pretty good data now, and actually every time I look at the data, we are not at the top end anyway in terms of donor fee. In fact... Our people sometimes think we're not quite as competitive as they would want us. They think we're cheap. So, you know, so we can see that data kind of area by area, centre by centre. And, you know, we're pretty comfortable that we are, if not in the middle of the pack, at the lower end of the pack on donor fees as we speak. So, but, you know, I've said before, do we think donor fees will go all the way back down to where they were pre-COVID? We are not modelling that. We just think the donor has a different expectation now of what they will receive, and I think it would require some external factor, some broader economic disruption that would cause donor fees to go back down to pre-COVID. Hence why we're so focused on other initiatives to really bring down the overall CPL. It's not to say donor fees won't go down. We think they will, but we're not modelling that they'll go all the way back down to pre-COVID.

Got it. Thanks for that. And just as a follow-up, changing topics, specifically hemogenics, How do we think about that with regards to the recognition of revenue for some of the geographies? What are you recognising and what are you providing for? And then secondly, as part of that, do we get a feel for what sort of IP amortisation you're going to be backing out specifically related to that part, which is, I guess, included in the bearing segment?

I appreciate the question, Steve. And first off, I just want to say what an unbelievable opportunity it is to change the journey for hemophilia patients. Over the last couple months, I've been able to be out with the commercial teams and meet some of the patients and talk to a grandfather who's had infusions for years and now has an opportunity with their grandson to have that person, their grandson, have a completely different experience. To me, This is pioneering, and we're really making a difference in terms of the life experience of our hemophilia patients. So absolutely a great feeling and so great to be part of a company that's making that happen. And with that, I'll hand off the bill to talk through the dynamics in the market because the The system in the U.S. and the system in Europe will obviously be quite different in terms of how we approach the contracting with the providers and the governments. Bill.

Thanks, Paul, and good afternoon, Steve. I think I would just first of all echo what Paul has said. We are incredibly excited and to be frank, honored to be able to bring this groundbreaking product to patients. We've been in this space as a leader for a long time. As you know, we have the leading product in the market with Idelveon today. And I can come back to that if need be. And to be a pioneer is quite exciting in this area. I personally believe this is the future in hemophilia. I also believe gene therapy will be the future. in orphan and rare diseases broadly. Having said that, there's a lot of kilometers to go, as we might say. These are upfront payments. They're expensive products. We've got to do a lot around education with physicians and with patients and payers, et cetera, et cetera. We're really excited to have the first couple of patients dosed at the end of the fiscal year that we just completed. And there are a number of patients in various parts of the queue. You would expect that you've got to go through neutralizing antibody testing. We've got to go through office preparation and office testing. making sure they're ready to administer this product in their space. We've got to go through significant reimbursement hurdles and all of those hard kilometers have largely been overcome. So specifically to your point, Steve, I think the majority of the patients in FY24 will still come out of U.S. We are awaiting A bit more work in Europe around some reimbursement and pricing negotiations, but fully expect to see the first patient in Europe. Likely as we get to the end of this calendar year or the first part of the next calendar year. So I would say 75 to 80% of the patients in 24 will come out of the US and the balance out of Europe. Having said that, I'll just add a couple of more comments. We are now about 78 to 80% of patient lives covered by reimbursement in the US. Close to half of the hemophilia treatment centers now trained and prepared to administer. We've distributed many, many, many test kits for neutralizing antibody. We have a number of prescriptions going through the queue relative to reimbursement and feel really good about where we are with this product. You know, it is going to be, and I think we've always known that it was going to be a different launch trajectory than a product like Idelvion, which was a major advancement, but in a space that was quite comfortable with replacement therapy. So, exciting. The teams worked remarkably hard. The early feedback from patients has been excellent. Absolutely exciting and incredibly rewarding for us, and we're quite excited.

Thank you, Bill. Steve, I might just answer your very specific accounting questions. So on the revenue recognition, it's broadly, and these are a bit of general statements because each jurisdiction is slightly different, but it's a broad statement, and particularly in the U.S., We recognise the revenue up front. There is, in some jurisdictions, the requirement to essentially probability assess whether there's any, like if the durability doesn't happen, you have to hold something back as a durability guarantee. But that is relatively small in the scheme of things. And then the second part of your question in terms of amortisation, we're amortising it on a per patient basis. So the amortisation will be dependent on how many patients we dose in the current financial year. Overall, you might sort of think $20 to $30 million would be the ballpark for the forward year.

Thank you. Fantastic. Thanks, Steve. Next question comes from Saul at Aston at Barron Joe. Go ahead, Saul.

Thanks, Mark, and good afternoon, Paul and Joy. Two questions for me. The first one, Paul, you talked about sustainability of IgE growth in that high single-digit level over the long term. I'm just wondering, as it relates to FCRNs and what looks like competition coming across a large number of autoimmune diseases, Is the confidence in that sustainability more to do with the idea that that new product is not going to gain much share, or is it to do with the growth that you're expecting to see in areas where there's no direct competition, such as primary immune deficiency and secondary immune deficiency?

Thanks. Yeah, thanks, Saul. I hope you're doing well. I think the answer is yes and yes, right? I mean, we're quite bullish on the growth and the need for IgE. And we really, when we look at the underlying data and the history of our portfolio in this space, you know, the thousands of years of patients' experience, their safety record, we think it will be very hard for a competitor to really make a significant trajectory in market share. Remember, please, CIDP is only about 20% to 25%. of the overall IG volume. So even if you had a wildly successful launch, which again, the data wouldn't necessarily support today, you would still only be talking a small percentage of the overall IG franchise. I don't know, Bill, if you want to add anything to that.

Just to be quick, I would just say, Saul, I think we believe that there are significant underserved patients in PID and SID for sure. You've seen significant growth in the SID space. But I would say significant growth opportunities in CIDP.

Thanks. And can I ask, Joy, just a quick one, Joy, just on the guidance. the translation of revenue growth through to MPAD-A growth. I'm just wondering, where does the leverage come through? Is that effectively simply leveraging the finance cost line or do you expect some uplift to either gross profit and or operating cost leverage?

Thanks, Saul. We do expect further operating leverage down the P&L, a little bit in gross margin, but then further as you go down the P&L as well, pretty well all the way down. So, yeah, I mean, it will be our first really normalised full year, right, post the acquisition of CSL V4. We'll have 12 months and 12 months, so... starting to, as I said earlier, starting to see some of the benefits that we've been working on over a few years now, as well as a bit in the gross margin line.

Thanks, all. Cheers. Next question comes from David Lowe at JP Morgan. Go ahead, David.

Thanks very much. If we could just start with the generic competition that you're expecting for the VTOL business, just if we could have an update on what you're anticipating and what was incorporated into guidance, please.

Sure. So first off, I'm very pleased with the progress we made with CSLV for not only the acquisition, but also the growth, right? 14% revenue growth on constant currency, again, against unaudited numbers, but really impressive, and fueled by iron and macera. So on the LOEs, we knew during the due diligence that the LOEs would come, so it's largely expected. However, the approval path in the EU ended up being different than we thought it would be, so that resulted in it moving up. So when we look at our overall preparation, we're spending lots of time making sure we're fit for purpose in both how we approach our commercial footprint in the market, We're actually taking advantage of the power of CSL by bringing tendering excellence, which we have in both bearing and securus, to really make a difference. We're really advancing the opportunity with real-world evidence in terms of how we actually look at our real-world experience and look to extend labels, and you have a great example of that today. with the heart failure label. And we now look for opportunities, like I mentioned, of patient blood management. We are really committed, as we shared at the market day, the 10% growth over the medium term. Acknowledging the LOEs, we're going to have to adjust and move to the dynamic of the marketplace. So we do know of a competitor that is approved in, you know, over, you know, double-digit countries in Europe. But I will assure you we are ready, we've accelerated our preparation, and we will succeed in the expansion of iron for patients around the globe.

Great. Thanks very much. And just my other question, on the pilot site for the yield enhancements, can we just confirm that at a pilot level you've seen this step change in yields and that it's a double-digit increase?

you know, we can confirm not only have we seen the double digit, but we have delivered the quality of product that we expect for IG from a comparability viewpoint.

Good. Thank you very much. Thanks, David. Next question comes from David Stanton at Jefferies.

Go ahead, David. Good afternoon, and thank you very much for taking my question, team. Look, I note that Privagen's growing faster than Hyzentra. Why aren't we seeing hyzentra growth to the same extent as privilege and growth is there some kind of structural constraint or you're selling potentially into into lower price mark more into lower price markets or has there been an impact from fcrns as they move into potentially treating mycenae gravis any color would be greatly appreciated thank you yeah i'll ask bill to jump in on that one

Yeah, thanks. Thanks, David. Good afternoon. There is no structural change whatsoever there. I think if you go back five years or so and you look at a compounded growth rate and that's kind of pre-COVID and then going through COVID and then coming out of COVID. The SCIG volume has grown much, much, much faster on a compounded annual growth rate than IVIG. I think during COVID, as you would expect, In fact, given the stay at home order, social distancing and so forth was a strong desire to grow or to go to Hyzentra. As we've come out of that, there's been a significant pent up demand for IVIG. in particular in Europe, but in the U.S. as well. So it's, frankly, meeting the demands of a number of markets, and these are not low-priced markets whatsoever. And then, lastly, just to comment on the pricing side of it, and I think as Joy mentioned, we have largely closed the gap on pricing between Europe and U.S. in particular, but I would broaden that by saying rest of the world. So by no means are they low-priced markets.

Good. Understood. Thank you. And my follow-up then, if that's all right, Mark, you know, how are we going to see acceleration in specialty product growth over the near to medium term to potentially sort of add to gross margin growth over that medium term as well. Thank you.

Yeah, maybe I can make a few comments. One is, you know, obviously, Samara, we had some supply challenges a few years ago, but we continue to resolve those, and now we see some growth back in that market, particularly in Europe, and we're making headways in the U.S. as well. I think if you look at our overall programs in Kcentra, And others, you know, case center, there's still a lot of market growth. And I know there's been talk about competition entering there. But there's still 35% of the patients on fresh frozen plasma, you know. And I think that's a huge opportunity to expand the market and move forward. So I think we'll continue to see that happen. And then, obviously, we're all very excited about GARDA and what that will do for the HAE market, right? Remember... We have Haygarda, which has really, you know, been over 80% of the patients in the prophylaxis space are on Haygarda. We continue to see new ads. That market overall has increased. It's kind of similar to Bill's comment earlier where, you know, as people come into it, the diagnosis, the observations, the medical energy around it increases. We are very excited about bringing Haygarda back. into play where we have a single, you know, new technology, factor 12A, single, you know, once a month dosing with an auto injector. It's going to be really powerful, and that's where we see a lot of our growth coming in specialty products. Bill, I don't know if you wanted to add anything.

I would just add quickly, David, I think all of that is right. It's really fascinating. This is a group of products that largely didn't exist 8 to 10 years ago, now contribute close to $2 billion in revenue. You know, beyond the category growth, Kcentra grew another 10% last year on the revenue line. And while, you know, a month and a half is a bit early in our current fiscal year, you know, continuing to show really nice positive signs for the year that we're in. Beyond that, I would just add to Paul's comment, Garadasimab is a really, we think, a – a game changing product in that space with a very high margin for us. We think that'll add to the growth. We haven't included 112 as Joy mentioned, but certainly that would change the size on the specialty market growth. And then lastly, and we'll talk more about this at the Capital Markets Day, is the whole PBM effort, which will lead to some kind of broader growth here. And then lastly, as you know, we're in the process of the trauma trial for Kcentra. And if we're successful there, and it's going to take some time, but if we're successful, we think that there's some really nice growth opportunity as well.

Good. Thanks, Dave. Next question comes from Laura Sutcliffe at UBS. Go ahead, Laura.

Hello. Thanks for taking my question. I've got two, but they're both on B4, so I might ask them together. Firstly, I was wondering if you're at all concerned about the potential for the widespread use of GLP-1s to impact your dialysis book of business, given that a fair amount of CKD is associated with excess body mass. And then secondly, just a quick one on Mycera. Obviously, that contract with DeVita has been substantial, and I was just wondering if you could confirm whether it's subject to the same carve-out payment from the JV, as is the case or has been the case historically for sales to all non-FMT clinics.

Thanks. Do you mind, Laura? And good afternoon. Could you just repeat the second question? I had a little trouble following it.

Sorry, yeah. So for my sera, historically sales to non-FMC clinics have been subject to a carve-out payment from the JV. I was just wondering if the Mycera contract with DaVita is subject to that same financial arrangement.

Thanks. Okay, great. So thanks for your questions. The first question was obviously on new technology, GLPs, and will that affect dialysis? You know, I think the dialysis market, the likelihood that that evaporates over the next five to ten years is small. I think dialysis is bouncing back. after what was a very tough period with COVID. Obviously, you know, GLPs could introduce a different paradigm, but in our current modeling, we don't see it being substantial in the near to midterm relative to the dialysis market. In terms of your question on Macera, I do believe that carve-out does apply for products sold to other dialysis providers beyond FMC.

Good. Thanks, Laura. Next question comes from Craig Wong Pan at Royal Bank of Canada. Go ahead, Craig.

Great. Thanks very much. Just with looking at your plasma collections, they are at record levels now, but the growth rate did slow from the first half to the second half. I'm just wondering if that was due to, like, a weaker comparable number, or is there something else that's happening there to impact the growth rate?

In terms of the first six months to the second six months? Yeah, a lot of that was just seasonality. If you think about the tax season, you know, the winters, you have weather impacts. So it wasn't anything structural in terms of what we had planned or budgeted for.

And then my follow-up question is, just with your plasma collections, could you share – like how much growth coming from like new donors or returning donors sort of from new center openings. If you could kind of share any more on that, that would be great.

Sure. I mean, if you think about, it's always a mix of all of them, right? But of a lot of our growth, we've kind of stabilized now after a higher number of applicant donors to roughly five or five and a half percent applicant donors. So a majority of the growth comes from our returning qualified donor base, which, you know, we're privileged to serve.

Thanks, Greg. Next question from Chris Cooper at Goldman Sachs. Go ahead, Chris.

Thanks, Mark. Joy, just slide 14, it does look like the operating margin and bearing just contracted slightly in that second half, despite the gross margin going the correct way. So I think you said earlier in the call, on a full year basis, SG&A was flat as a percentage of sales. So I just wanted to check, we should be taking the full year level as the go forward rate, not the second half exit rate for SG&A and bearing. Thanks.

Yes, I think that's right. Yep.

Yeah, totally right. Okay, got it. And the follow-up, so two of those products you're obviously referencing for the gross margin recovery, Hemgenics and Garadasimalva, just very quickly on both. So just on Hemgenics, I know there was some optimism around a launch in Europe before the end of the fiscal, so it now sounds like that's been pushed out by perhaps six months or so. Any additional colour on what drove that disappointment there? And And just on Gara, I'll just squeeze that in. You said, I think earlier in the call, regulatory submissions have been done. I just wanted to get an update on the expected approval and commercialization timings from here.

Yeah, well, I'll start, and then I'll ask Bill to make some comments on hemogenics. But on guard, obviously, we don't typically comment on approval times, right, that we have submitted, as we said, and we're preparing submittals around the globe, and then where they obviously take their due process, you know, and we'll see how that plays out with the agencies. In terms of hemogenics, I don't know whether I'd call that a disappointment. I think it's It's what's the reality of being a pioneer in the space in terms of as you move into these spaces with a life-changing therapy, the system takes time to react to that and make sure that the entire ecosystem can deliver to it. So I think, you know, we're pushing hard. The team's working very hard, to Bill's point, but there are some natural things that happen in a complicated launch like this. Bill, if you want to add anything.

I know we're running close on time. I would just say absolutely not disappointed. We remain – and if I left you with that thought, Chris, I apologize. We remain as excited as ever about Europe and this product. As you know, the pathways in Europe just take longer around – pricing and reimbursement and so forth. So I'm as bullish as ever about where we are on Europe. And as Paul said, you know, this is a massive lift with a new to market, completely historic product.

Thanks, Chris. Next question comes from Matthew Chevrier at Citi. Go ahead, Matthew.

Yes, good afternoon. Thank you. Just one on IG pricing. What kind of growth are you seeing now relative to history, given the higher rate of inflation? And do you think there's still opportunities to further improve your pricing relative to competition?

And I'll let Bill comment as well. But, look, we've never wanted to be the price leader in the market, right? We've always felt that sticking close to CPI makes the most sense. Now, with that said, you know, as we opened up and started to put more into tender markets, we obviously respond to the dynamic of the market and make sure – that were good in terms of that pricing. So if we can take advantage of pricing because of tender availability, we certainly would. I think if you look across the globe, you know, the pricing story, you know, for this fiscal year 23, was in EU and ROW, about 25% of our revenue growth was to pricing, and the U.S., about half of our revenue growth was to pricing. And I think that probably reflects where we'll continue to move, Bill.

No, I think that's right, Paul, and we've tried to take an appropriate pricing strategy for the last 8 to 10 years. What I would say, Matthew, is that our – Tender pricing continues to remain quite strong, and we've built some great capability around tender management and pricing and seeing some lift there that's maybe beyond kind of headline pricing. The other thing, and I've mentioned this on prior calls, but our team in Europe has done an amazing job of – getting list price increases in almost every European country now. And while list price is not selling price, it certainly allows us to facilitate better ASP and ultimately tender and contract pricing. So I think we've been in the, you know, let's call it mid-single-digit range, a little bit higher in some markets, most of that coming from tender markets. And we believe that there is still pricing room in the future.

Thank you, Matthew. Ladies and gentlemen, we'll need to make the next Q&A our last. So that is from David Bailey at Macquarie. Go ahead, David.

Yes, thanks, Mark. I'll be quick. Just in terms of that gross margin recovery, I just want to be explicitly clear about what's included within that. It does not include CSL 112. It doesn't include the Horizon 2 in IG, all of the step change. My question is, what's embedded within assumptions around the RICA platform? And then my follow-up question would be just a bit of help around fiscal 24 for V4 on top-line growth as well as gross margin, given some of the moving parts there.

Yeah, thanks, David, for the question. I'll confirm and I'll let Joy make some comments. It does not include CSL 112 or Horizon 2 for the mid-term recovery that Joy had described. But, Joy, if you want to add any comments.

Yeah, thanks, Paul. And on recurrence, I think it's partly why we say the return to COVID margin happens sometime in the subsequent three years because there's clearly a number of variables and how we finally end up agreeing to roll RECA out. It will be one of those variables, David. Your second question was V4, top fiscal year 24. Yeah, we're not really providing guidance by business unit on revenue, but clearly we've got the overall revenue growth of... 9% to 11% is our forward guidance for FY24, and V4 will fit inside that envelope.

Thank you, David. Ladies and gentlemen, thank you for your interest in CSL. We'll now draw the meeting to a close.

Bye-bye.