Earnings Transcript for CSL.AX - Q4 Fiscal Year 2021

Mark Dehring: Ladies and gentlemen, good morning. And welcome to CSL Full Year Results Call for Fiscal 2021. It’s Mark Dehring speaking and joining me online is Paul Perreault, CSL’s Chief Executive Officer; and Joy Linton, CSL’s Chief Financial Officer. As with past practice, Joy will provide an overview of the results and operations, and then, Joy, will provide some additional details on the financials. We will then move to Q&A. With a 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 by all means 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 will now pass you over to Paul Perreault. Paul?

Paul Perreault: Thanks, Mark. Good morning. And thank you everyone for joining today’s review of CSL’s full year results for 2021. Today, I will provide an overview of a strong set of results achieved in an extremely tough global environment and then I will hand over to our new Chief Financial Officer, Joy Linton, as Mark said, it gives me great pleasure to introduce Joy today. She has been with us since March and has quickly assimilated into CSL. Joy is already having a very positive impact across the organization and Joy’s met many of you on this call and I am sure she looks forward to spending more time with our investors in the coming weeks. She comes to us from Bupa in the U.K., where she was Group CFO and Executive Director for the past five years. Joy will be providing more details on the financials and I will then conclude with an update on our strategy and our outlook. And then we will be happy to take your questions at the end. So, for some of our highlights on slide four, I am pleased to report that CSL has delivered a strong result for fiscal year 2021 with revenue up 10% at constant currency and net profit after-tax also up at a constant currency. This was an excellent performance given the very challenging conditions in the environment that we have faced through the global pandemic. Despite all the complexities that we’ve had our CSL Behring and Seqirus businesses maintained all critical operations, demonstrating what I can say is real resilience and agility across the organization. This is a testament to not only our dedicated employees but also to the CSL values. Our employees have remained dedicated and focused on delivering on our promise to patients and the public health around the world. In terms of the highlights for CSL Behring, we achieve strong growth in many of our core products. This included another strong performance from HIZENTRA, our market-leading subcutaneous Ig product, which was up 15%. Two of our leading Specialty Products also showed solid growth, HAEGARDA was up 14% and KCENTRA up 7%. Albumin sales 6 -- sales grew 61% as our sales in China normalized from the change in business model. And in the CSL Behring business, we implemented a number of digital transformation initiatives, which has expanded our flexibility and enhanced our customer facing interactions. Our influenza business Seqirus delivered an exceptional performance. Sales of seasonal influenza vaccines were up a very strong 41%. Seqirus is distributed a record number of doses globally as some 130 million and we announced a new world class biotech manufacturing facility to be constructed in Melbourne, Australia. Since COVID-19 hit in early 2020, it has had an impact on many aspects of our operations. In our CSL Behring business plasma collections have been challenged. However, we put a number of initiatives in place and are starting to see the improvements. I will go into more detail on this later in the presentation. And for Seqirus COVID has provided a tailwind as demand for influenza vaccines has increased, but also because of our positioning of our enhanced product portfolio. So despite the challenging environment, we’ve continued to invest in the business. We remain focused on executing our long-term strategy. I am confident that CSL is well positioned to emerge from this stronger than we’ve ever been in the past. Turning to the next slide and CSL Behring sales by therapeutic area. Overall, the Behring portfolio recorded revenue growth of 6% on constant currency. Immunoglobulins our core franchise was up 3% with HIZENTRA growing an impressive 15%, while PRIVIGEN came under pressure. Albumin was up 61%, haemophilia was down 4% and Specialty Products overall was up 2%, all at constant currency and I will go into more this detail shortly. In terms of the geographic split of the CSL Behring revenue, North America continues to be our largest market where revenue grew 5%. Our next biggest market is Europe, which was down 6% in revenue and this is where we felt the supply tightness in IVIG. Asia-Pacific was up 44% as a result of strong growth in Albumin in China. Moving on to slide six on Immunoglobulins, the first thing I would say is that, underlying demand for Ig continues to be extremely strong. This is due to significant patient needs in our core indications, namely primary immune deficiency, secondary immune deficiency and CIDP. Despite the supply challenges caused by COVID-19, we still managed to grow our Ig franchise by 3% led by strong growth in our market leading subcutaneous product HIZENTRA, which was up 15%. Since the start of the pandemic, we’ve seen an increased preference for HIZENTRA with its convenience and benefit of home treatment. With this flexible dosing, patients could administer HIZENTRA at home and better control their disease state, which is an attractive option, especially during these COVID times. HIZENTRA has also seen a continued study uptake for the treatment of CIDP in the United States. CSL is still the only company with approved subcutaneous and IVIG treatments for CIDP. HIZENTRA also continues to have orphan drug exclusivity for CIDP in the U.S. Two-thirds of targeted physicians have now adopted HIZENTRA to treat CIDP and the European Academy of Neurology has just released new guidelines on CIDP, which includes evidence based recommendations for the use of subcutaneous Ig for maintenance treatment in CIDP. Overall, HIZENTRA remains the clear leader in the subcu market, with around 60% market share in the United States. Our IVIG product PRIVIGEN was impacted by the accelerated shift to HIZENTRA, as well as the tightness of supply and plasma resulting from COVID. Across the industry, the supply of immunoglobulins tightened further in the second half of the year and was felt in markets outside the U.S. As a result, we have been managing our supply chain carefully and we have taken steps to avoid any major disruptions to supply and ultimately to our patients. For example, we implemented a customer order fulfillment process to ensure a fair and equitable supply to current customers and we have not been opening new accounts or taking on new customers. Moving on to slide seven on Albumin where sales grew 61%. Our new distribution model in China has been operating now for 12 months with sales for fiscal year 2021 now reflecting a more normalized level. The new model is working well and gives us direct management of over 180 distributors in China. This has expanded our geographic coverage and given us increased penetration into retail pharmacy in the lower tier cities and hospitals. In the first half, there were reduced hospital operations as a result of COVID-19. However, the second half saw more of a return to normal levels. And whilst a competitive environment in China has increased, the demand outlook for Albumin is for volume growth in the mid-to-high single digits. Outside of China we achieve volume growth for Albumin in Europe and emerging markets, whereas sales in the U.S. declined as supply constraints started to emerge. On slide eight is haemophilia where sales were down 4% for the year. This portfolio was impacted by reduced doctor visits and patient consultations during COVID-19. Against the backdrop, however, IDELVION, our long-acting recombinant factor IX product achieved modest growth and remains the clear market leader for haemophilia B patients. It’s compelling clinical profile continues to drive patient demand and market share. IDELVION continues to be launched in new markets and this year included France, Argentina and Singapore. Then the haemophilia A market sales of AFSTYLA declined by 9% due to continued competitive market pressures. This competition has also had a negative impact on our plasma derived haemophilia products. However, this was offset to some extent by a 13% growth in HUMATE, which was underpinned by increased market share in the U.S. for the treatment of von Willebrand disease. We also saw a decline in MONONINE our factor IX plasma product as patients continued to switch over to IDELVION. Onto slide nine and Specialty Products, overall, Specialty Products grew 2%. The standout performer continues to be HAEGARDA, our transformational therapy for treating patients with hereditary angioedema or HAE. HAEGARDA grew strongly up 14% due to strong patient demand. We now have the most patients on HAEGARDA since launch. Demand is being driven by the shift from on-demand to prophylaxis treatment. Also contributing to the increase in patient numbers were new launches for HAEGARDA in Europe, Australia and Canada. BERINERT was down 5% reflecting also patients shifting to HAEGARDA. The other main Specialty Products to record solid growth was KCENTRA, which was up 7%. I feel this is a very strong result given sales have been tempered by the reduction in elective procedures and incidence of trauma during the pandemic. KCENTRA’s growth underscores the unique medical benefit of this therapy. The reduction in hospital visits also impacted other hospital products with RIASTAP down 1% and wound healing products down 19%. For ALPHA-1 sales were down 26% following supply interruptions at our Kankakee facility in the US, which we mentioned at the half year. Turning to slide 10 and plasma collections, like, this is a topic that is on people’s minds and as has been well documented, COVID-19 presented the industry with many challenges in plasma collections is one such area of our business that adversely affected and impacted by the pandemic over the past 18 months. Not only were we impacted by quarantines, stay-at-home orders, restricted movement of donors, fear of disease, but also the unprecedented government stimulus programs and continued unemployment benefits provided by the U.S. Government. As a result, our plasma collection volumes for fiscal year 2021 were down around 20% on the previous year. And these liters were all collected at a higher cost per liter, including factors such as additional PPE, cleaning requirements, social distancing, labor costs and higher compensation paid to donors, particularly in the last quarter of the year. But in response to these challenging conditions, CSL plasma implemented a number of targeted initiatives to focus on growing plasma collections. As a result of our efforts, I am pleased to say we have seen sustainable improvement in our collections over the course of the past year. And the following slide will show how we’ve been tracking. First, I would like to share some of the initiatives that CSL plasma has undertaken. We’ve enhanced our operating and marketing efforts to attract not only lapsed donors, but also new donors, which are an important source of future donations. We’ve seen a strong adoption of new technologies introduced to improve the donor experience, such as a donor app, self-serve kiosks and the ability for donors to register online. At last camp, we had over half a million downloads of our new donor app. We continue to lead the industry and the opening of new plasma collection centers. We open 25 new centers in fiscal year 2021 despite COVID and plan to open up to and -- we plan to open up to another 40 centers in fiscal year 2022. We now have a network of over 300 collection centers globally, which we believe to be the most efficient in the industry. We led the industry change and reducing the plasma whole period from 60 days down to 45 days and we continue to manage our supply chain carefully and optimize the finished goods inventory in order to take care of our patients. And finally, we’ve entered into a collaboration with Terumo to deliver a new plasmapheresis platform. Trials are progressing and we anticipate regular regulatory clearance for this new technology in early 2022. Turning to the next slide and this is the graph that shows our donor numbers on a weekly basis. It’s a busy slide. So let me try to walk you through it. The red line is calendar year 2021 thus far. Black is 2020 and grey is 2019. If we go back to the start of our fiscal year 2021 which is July 2020, this is when we launched our first series of initiatives and we saw collections start to improve over the six months to December, which we showed in our half year results. Then if we turn to January 2021 and the most recent months the red line, you will see that collections declined for all as a result of another round of us stimulus and some really damaging weather events in the United States. From this point in mid-April up to today, we see the promising rebound. We introduced additional initiatives including higher donor fees, which really started in the April timeframe. The stimulus effect began to wear off and the rapid rollout of COVID vaccines in the U.S., which has seen increased movement and more donors coming into our centers. You will notice slight reduction in late June and then the resumption of growth. This was the effect of the U.S.-Mexican border closure for the purposes of plasma donation. Despite this growth has resumed and continues under the new financial year. In the meantime, we are pursuing a retraction of the new customs and border control directive, with just six centers close to the border and a further seven within reasonable proximity. Investors should see the centers on the border in the context of the larger CSL franchise over 300 centers globally. While we’re still not back to pre-COVID levels, we are encouraged -- we are encouraged by the continued upward trend and look forward to getting back to that previous level soon. Moving on to slide 12 and Seqirus revenue move the -- the performance of Seqirus delivered was exceptionally strong in 2021. Total revenue was over $1.7 billion, up 30% of constant currency. This has driven by very strong growth and seasonal influenza vaccines of some 41%. The increase reflects the ongoing shift to Seqirus differentiated products such as Fluad, which was up 60% and increased demand due to COVID-19. The Northern Hemisphere continues to be the non-dominant market for Seqirus with the U.S. and Europe accounting for approximately 80% of Seqirus’ revenue for the full year, with both regions delivering strong growth. You will note Asia down 6% or 15 million. This is due to the lower in licensed vaccine sales following the completion of the ZOSTAVAX catch up program in Australia. Continuing with Seqirus on slide 13 and operational highlights, as I mentioned, Seqirus achieved significant growth in its seasonal influenza vaccine, which saw a record volume of 130 million doses distributed across the globe. FLUAD QIV was launched in the U.S. contributing to very strong sales growth for this high value product, which is used in the elderly market. FLUCELVAX was launched in Australia this past season and Seqirus has also entered into new and extended influenza agreements with the U.K., Sweden, Switzerland and Canada, and we provided support for the company’s COVID-19 efforts. Looking forward the pandemic has seen the acceleration of mRNA technology and Seqirus is leveraging this by accelerating our own program. Ours is a next-generation technology self amplifying mRNA which aims to address some of the challenges experienced with current generation mRNA vaccines. Preclinical studies have been promising and human trials for influenza are expected to commence with a Phase I study in 2022. FLUAD QIV will be launched in Europe in the upcoming Northern Hemisphere season and FLUCELVAX for infant stage six months and over is expected to be approved in the U.S. this year. The fill and finish expansion projects in both Liverpool and Holly Springs are well advanced and will be operational in the next couple of years. Moving on now to slide 14 and some of the R&D highlights. There’s been a lot of activity and achievements in R&D over the past year and while some programs were disrupted by COVID-19 in the first half of the year, everything is back up and running and we’re trying to move at full pace. We have a number of exciting programs underway in each of the six therapeutic areas and in the interest of time, I will highlight just a few. But before I do, I would encourage all of you to listen into our annual R&D briefing to be held in October again this year, when we will go into a lot more detail on the pipeline. So beginning with immunology, PRIVIGEN for the treatment of CIDP was launched in Japan and the first patient was enrolled for our Phase III study for Garadacimab for the treatment of HAE. In hematology, we closed the uniQure transaction to commercialize the gene therapy product EtranaDez and the BLA for that product is being prepared for submission to the FDA following as soon as that Phase III trial. In cardiovascular and metabolic the Phase III trial for CSL112 continues to progress well with over 13,000 patients now enrolled and successfully completed the first and second futility analysis. The next milestone will be the readout expected in 2022, where we hope to have a readout on first efficacy. In influenza vaccines, we commence the Phase II study for our adjuvanted QIV cell vaccine. And as I mentioned, we have undertaken preclinical assessment of the self amplifying mRNA technology for influenza and are expected to commence a Phase I study in 2022. I am now going to hand over to Joy to go through the financials in a bit more detail. Joy?

Joy Linton: Thank you, Paul, and hello, everyone. Before I get into the numbers, I want to say how pleased I am to be here presenting my first set of results as Chief Financial Officer. I joined the company in March and I’ve already had the opportunity to tour a number of our operations around the world. And what stood out to me was the strong sense of purpose and commitment to our values that everyone takes into their work every day, particularly against the difficult backdrop of the pandemic. As Paul said at the outset, this commitment was reflected in a strong result for CSL. On slide 16, you will see that our reported net profit after-tax has increased from $2.103 billion to $2.375 billion, an increase of 13%. On a constant currency basis, the net profit after-tax was $2.307 billion, an increase of 10% after adjusting for foreign currency tailwind of $68 million. The FX tailwind is attributable to the U.S. dollar weakening against most major currencies, notably against the euro, the Chinese yuan and the Australian dollar. You will notice foreshadowed at the half year, the second half result is more modest than the first half, reflecting the seasonality of the Seqirus business and the COVID related impacts on the Behring business. Included in the panel on the right side of the slide, you will see some of the key drivers of the result and these include the completion of the transition of our new business model in China, which now reflects a more normalized sales number and profit number. As Paul mentioned, we are proud of the resilience CSL has shown in responding to the pandemic, but our financials have been impacted in number of ways. For example, R&D programs have been reprioritized, additional costs have been incurred through the reengineering of manufacturing processes, the business has implemented numerous cost containment strategies as we have adapted to this new normal and we have been manufacturing COVID vaccines. As Paul detailed, the stay-at-home orders and strict lock downs have not only tempered demand for some therapies, but have also adversely impacted plasma collections. Seqirus had yet another exceptional performance driven by strong demand for our differentiated products and improved manufacturing facilities and this highlights the benefit of a diversified portfolio for the group. On gross margin, lower volume throughput in Behring has led to a greater fixed cost per unit negatively impacting gross margins. While at Seqirus, the opposite has occurred, as we have benefited from improved manufacturing efficiencies from higher volume and a favorable product mix. I’d also like to draw your attention to a few accounting items that have impacted the result. Firstly, you should be mindful of the long manufacturing cycle of plasma products. Any change in the sales price of our therapies is reflected almost immediately through the P&L, whereas any increase in the input cost sits in inventory on the balance sheet to be released many months later, with a resultant compression on margin. We have seen some of that effect in the second half of FY 2021 and we will continue to see this into FY 2022. This year we’ve only had one change in accounting policy. That being that we’ve adopted an updated methodology to account for our cloud computing arrangements or software-as-a-service. We now expense rather than capitalize and amortize these implementation costs. The financial impact however is relatively modest. And lastly, included in the result is a one-off impairment charge of $74 million for certain assets at Kankakee and Lengnau in Switzerland, which are now surplus to our requirements. Looking at the financials in more detail on slide 17. As Paul has already said, total revenue was up 10% on a constant currency basis to $10 billion. Gross profit of $5.7 billion at constant currency was up 9%, reflecting a 50-basis-point gross margin compression. EBIT was up 11% on constant currency to $3 billion and EBIT margin grew 50 basis points, reflecting the proactive management of costs. I will talk about this a little bit more shortly. Both NPAT and EPS were up 10% at constant currency. Cash flow from operations was $3.6 billion, a 46% improvement. Factors driving this growth include, improvement in working capital management across the business, our ongoing cost control initiatives, timing differences between cash receipt and activity, for example, prepayment in relation to the new BioSecurity facility that we will be building in Melbourne, and lastly, we’ve highlighted at the half, the benefit of cash flow of a reduced number of donors. However, six months on it’s worth noting that this has been largely offset by the higher per unit cost of plasma in inventory. The final dividend declared of US$1.18 per share is an increase of 10% with the total FY2021 dividend also up 10% to US$2.22. For Australian shareholders, this final dividend translates to approximately $1.61 AUD, up 9% and French to 10%. Turning to the segment results on slide 18. For CSL Behring total revenue was up 6%, gross profit up 3% and EBIT up 2% all at constant currency. You will notice a 25% reduction in other revenue. This is largely attributable to lower GARDASIL royalties. Higher collection costs and lower manufacturing efficiencies are contributing factors to the gross margin compression. It is expected further margin erosion will impact financial year 2022 given the nine-month to 12-month plasma manufacturing cycle. For Seqirus, total revenue was up 30%, with corresponding EBIT up 95%, reflecting strong demand and the continued success of our product differentiation strategy, as well as improved manufacturing efficiencies. These drivers are also reflected in gross profit with an increase of 43% at constant currency, and importantly, a margin uplift of 520 basis points also at constant currency. On slide 19 is a table showing the group’s expenses with the changes for the period shown on a constant currency basis. Before walking through each line item you will remember at the half year we highlighted that the profile of our full year expenditure would be skewed to the second half as there will be an uplift in second half expenses, social mobility resumed and this is what has transpired. We don’t manage the business in halves, however, the global pandemic has required most of our functions to make adjustments. In direct comparison to the prior year, our expenses are a percentage of total operating revenue and they have actually declined. Now moving to each line item, firstly, R&D, an increase of $47 million or 5% with total spend within the guidance range of 10% to 11% of revenue. CSL112 resumed in the second half following the COVID pause and have been -- we have been working very hard to restart all our clinical programs. We do expect that for the financial year 2022, R&D expenditure will continue to be in the range of 10$ to 11% of revenue. Sales and marketing expenses were up 7%, driven by commercial launch activities, including that relating to EtranaDez, partially offset by cost containment initiatives, as well as lower travel expenses driven by COVID restrictions. General and admin expenses increased 5%, a function of a number of small items including the SAS accounting policy update that I mentioned earlier. Finally, the group’s effective tax rate increase to 19.8%, reflecting movements in the geographic profit split. Looking forward, we anticipated the rate will once again be in the high teens for financial year 2022 and likely to be around 20%, if the proposed U.S. tax reforms are implemented. Moving to slide 20. This chart shows our inventory levels over the past five years and the various components split between raw materials, work in progress and finished goods by value. You will see the active management of working capital. As revenue has grown, we have maintained a steady inventory level as a percentage of revenue and this is indicated by the red line across the bars. Prior to 2021, the categories were fairly evenly split. However, you will note in 2021 a higher proportion of raw materials. This is a little counterintuitive given our lower plasma collections, however, has been driven by the higher cost per liter of plasma collected. There has been a small reduction in finished goods inventory, reflecting the lower level of inventory cover we are holding as we seek to manage the demand for plasma derived products with our existing customers and patients. Turning to capital projects, we’ve worked hard to continue to build new manufacturing capacity at all our facilities to support product launches and meet future demand. For FY2022, we expect total CapEx to be around $1.4 billion, again with a focus on growth and capacity. Some of these key capital projects include the expansion of our base fractionation capacity in Broadmeadows here in Melbourne and Marburg in Germany, where we continue to harmonize design and process across each of site for efficiencies of use. The expansion of our IG modules in Bern in Switzerland, now invalidation ahead of regulatory approval and we have further modules planned. The construction of Lengnau, which is nearing completion, as previously announced, we have entered into a long-term partnership with Thermo Fisher to optimize the utilization of this site. New plasma collection centers as we ready ourselves for return to normalization post-COVID, our facilities to support CSL112 production in anticipation of a successful trial outcome and launch, and a new R&D campus in Marburg, which will open its doors in mid-2022. For Seqirus, the more immediate CapEx program involves the fill and finish project at the Holly Springs site in the U.S. and longer term, the next generational biotech facility located here in Melbourne. And as we evolve and continue to grow as a global leader, there is an ongoing requirement for us to continue to invest in our ERP systems and processes to support our people and patients. And this will deliver process improvement on multiple levels and support our digitization programs in the years to come. And with that, I will hand back to Paul, who will take you through the company’s outlook for financial year 2022.

Paul Perreault: Thanks, Joy. Seems like you’ve been doing this forever. Very good. Before I move on to fiscal year 2022 outlook, I would like to touch on our strategy. So on slide 22, that you should see on the screen. This is our 2030 strategy that we put in place a few years ago before paid -- before COVID came along. And despite the challenges that we faced with the pandemic, our long-term strategy remains intact. Nothing’s changed. Well, there’s a few things that have changed, but the strategy hasn’t changed. Our purpose on serving our patients and delivering innovative products still holds true today and our employees and purpose driven culture are at the heart of our strategy and our values are going to continue to guide us in everything that we do. Throughout the challenges of pandemic, our people and our business model have shown great resilience and agility. I’ve been incredibly proud of their performance. The fundamentals of our business have never been stronger and the diversity of our pipeline is as robust as ever. This sets up CSL to build on our track record of sustainable growth for many years to come. This year, we have also developed a new sustainability strategy, which was recently endorsed by the Board. And on the slide you can see our sustainability vision which captures our commitment to a healthier world. To deliver on this vision and further support the execution of our 2030 strategy, we have identified three key sustainability strategic pillars, environmental, social and sustainable workforce. We have identified a number of focus area for each of these pillars and a series of actions across these focus areas to deliver over the medium-term. I look forward to keeping you updated on the progress of these initiatives. Turning to the outlook for fiscal year 2022. Looking specifically at CSL Behring, underlying demand for our core product Ig is expected to remain strong. Ig and Albumin sales are reliant on our current plasma collections and the manufacturing cycle times. Plasma collections are expected to continue improving with the initiatives we’ve implemented and with the rollout of COVID vaccines. For Seqirus product differentiation and COVID-19 are expected to continue driving strong demand for influenza vaccines. At a CSL Group level gross margin is expected to come under some pressure following the increased cost of plasma collections, but also by some modest margin expansion arising from the growth in Seqirus and the differentiated influenza vaccine portfolio. In terms of guidance for fiscal 2022, we expect revenue growth to be in the range of approximately 2% to 5% over fiscal year 2021 at constant currency. With net profit after-tax to be approximately $2.15 billion to $2.25 billion at constant currency. Of course, our forward-looking statements are subject to the usual disclaimers as mentioned at the start of the presentation. I’d like to finish -- COVID-19 is a once in a lifetime event and I am very proud of CSL’s response. CSL is a growth company, and although, the impact of COVID on plasma collections last year, puts 2022 behind this year’s profit number, continue to invest in the business and we look forward to returning to the growth all of you expect from CSL. Mark, with that, I think, we’d be happy to start opening up for questions.

A - Mark Dehring: Thanks, Paul. And we have a first question here from Lyanne Harrison at Bank of America. Go ahead Lyanne.

Lyanne Harrison: Good morning, Paul. Good morning, Joy. Thank you for taking my questions. And let’s start with guidance given that we’ve finished on that, this 2% to 5% topline revenue growth that you’re expecting, if I think about immunoglobulin, what are your expectations for the immunoglobulin pipeline?

Paul Perreault: So, obviously, Lyanne, thanks for the question. Part of that is continued to manage the immunoglobulin portfolio, especially the patient supply. So, remembering that there’s this nine-month to 12-month lag time on -- lead time and lag time on plasma collections, inventory is tight and you can see that in the inventory and finished goods number. So it’s going to be lower growth than probably where we were this year, which is contributing to the profit being slightly below where we are this year. But that will continue to improve and I expect a strong return to growth as we move through the year.

Lyanne Harrison: I am sorry, so when you say lower growth, is there a risk that the immunoglobulin revenue will decrease for financial year 2022 or is that being supported by, I guess, the HIZENTRA provision and whatever inventory you have?

Paul Perreault: Well, I think, it’s a combination of all those factors, Lyanne as you know. So there will be inventory, it will be mix, it will be geographic mix shift, it will also be some pricing as we move through the year. So I don’t expect it to be low. But I wouldn’t expect major growth coming from that segment.

Lyanne Harrison: Okay. Thank you. And just to, I guess, the second question, obviously, we’re seeing increases in Coronavirus Delta variant cases in the United States. What the impact are you seeing that has on collection particularly in those states with the higher Delta caseload?

Paul Perreault: Look, thanks for the question, Lyanne. We haven’t seen a big impact, as of this point on the -- with the Delta variant on plasma collections. I think when you look at the hundreds of millions of people that have had at least one vaccination, the Delta variant has been shown to be covered by most of the current vaccines to some extent. People are still out there, there are more masks being mandated in our centers, we’re back to full masking for that. But other than that, we continue to see the flow of donors improved, as you saw from the slide that we put up in terms of plasma donors coming through the system.

Lyanne Harrison: Thank you very much, Paul.

Mark Dehring: Thanks, Lyanne. Our next question comes from Steven Wheen at Jarden. Steve?

Steven Wheen: Thanks, Mark. Good morning, Paul and Joy. I wonder if we could start by looking back at slide 11 just on the plasma collection. It looks like it goes through to the first week of July. And then it would -- based on some general checks within collections, it would seem like this has improved since then. I am wondering if you’re seeing that. Is that something that you can comment on to sort of a date more recent to today?

Paul Perreault: Look, Steve, thanks for the question and the good chat. I think we have been seeing the same. So this was results presentation for last financial year and so that’s why we ended at the end of the financial year. Clearly, we’re encouraged by what we’re seeing and that, with the enhanced marketing and business development initiatives that we have the increased plasma donation awareness and education leading to new donor acquisitions, the retention and reactivation campaign. So we have the enhanced referrals for friends and families, the outreach to activate donors, following referrals that new donor app, as I said. So all of this is contributing and I think your channel checks are fine, because we are seeing continued improvement.

Steven Wheen: Right. And then just, secondly, you had highlighted around the middle of this half that the cost of plasma is up around -- plasma collection is up around 30%. Any change to that and how that might look going into 2022.

Paul Perreault: So, yeah, the donor fees, which are, as you know, a large component of some of the costs in the plasma collection space, really were implemented in the last quarter of the year. So it wasn’t a full year effect. But we did start to see from April onwards a larger impact on CPL or cost per liter, as we increase the donor fees from a competitive standpoint. But that is being starting to be offset slightly by the overhead recoveries as we improve collections, the hours per donation and the overhead recovery against fixed cost is also a big driver of cost in this business. So we are starting to see that moderate some. But I would expect that, the higher donor fees will be in place for a bit.

Steven Wheen: Right.

Mark Dehring: Thanks, Steve.

Steven Wheen: Thank you very much, Paul.

Mark Dehring: Next question comes from Chris Cooper at Goldman Sachs. Go ahead, Chris.

Chris Cooper: Thanks very much. Just following up on that last question, Paul, if you don’t mind. So look, I mean, there’s -- I recognize there’s a lot of uncertainty right now, but when you come up with higher donor fee should be in place for vaccine, could you give us some degree of expectation around how long that might be and how indeed you would manage to reduce that level over time without sacrificing the ability to get hold of collections in a period of scarcity? And then just, secondly, just commenting on your comment, as well that you hope to return to pre-COVID levels of collection soon. And it sounds as though from your commentary to the previous questions that the line on slide 11 has continued to narrow towards fiscal 2019 levels as time has gone on through the middle of August. Would it be your expectation at this stage that we can return to fiscal 2019 levels of collection at some point through fiscal 2022 and if so could you give us some expectation about when that might be?

Paul Perreault: A lot in that question, and certainly, when I say a bit, it really depends on the multitude of factors, right? I mean the continued COVID variance if it does start to impact us donor fees may be a big driver for maintaining donor collections. So I don’t have the exactness of my comments are big by design only because it’s not a one-to-one effect on any of one of these factors. So we’re trying to get as certain as I can. What we’re seeing is more donors returning, the stimulus is starting to wane. We don’t expect another stimulus, but unemployment benefits have not dropped off as quickly as we had expected either and so there’s still unemployment reimbursement coming at some pretty good levels and we’re seeing people not returning to work and/or other ways to supplement income as they might with plasma collection. So the donor fees at a certain level of driving that. It’s also the competition because in many of -- most of our cities we have competition. But remembering that, with the increase that we’ve seen, it’s -- donating is about getting people into the habit of donating. And so the more people we bring back from the labs physician, we expect to drive that line forward into 2022. Exactly when in this fiscal year we will cross over, it’s very hard to predict. But when I say soon for me it’s sometime this fiscal year, because that’s really what our plans have in terms of returning to growth post fiscal year 2022 and what’s going to drive that is more plasma and more Ig. That drives the demand for our collection of plasma. Also with the opening of new centers, another 25 centers we opened last year are part of that growth. So that’s factored in and that’s also assisting us in terms of driving forward. Many of our competitors have talked about opening additional plasma centers, but nobody has been able to get to the numbers we have and we’re planning an opening another 40 this year. That’s also in our planning and so we expect to see some benefit from that. So all of the initiatives together, I can’t give you the exact date when all of this will happen, but I would say we’re looking through to the first half of this year and that will pretty much tell the tale would be my guess.

Chris Cooper: Thank you. That’s helpful. And perhaps, you can give you some respite from the collection discussion. Just moving on to mRNA if you don’t mind, I know you called out the program again today, sorry, if I missed it. Can you confirm if the clinical program that you’re starting in 2022 that’s going to be in flu or are you going to be looking at other viruses too? And I was hoping to push you to narrow that range slightly as well. I mean, it’s a fairly wide range in the context of a lot of recent progress from other companies in the market and obviously a highly dynamic area right now?

Paul Perreault: Yeah. So currently we’re looking at influenza as the candidate. So that is the plan. Another COVID mRNA vaccine is going to take a while to develop, although if there is another candidate that works within this space, we will certainly take a look at other vaccine candidates. And now over time I would expect that mRNA -- our mRNA vaccines could be useful in multiple areas outside of these two areas. There’s a lot of talk about advancements in other areas. I would say, wait to be seen. We did have some press out this weekend around some of our time lines for the clinical development and really having a candidate driving forward as quickly as we can, moving into Phase I this fiscal year. So I think we’re in good shape. It is a new technology with self-amplification versus the vaccines that are currently available. So we hope to, as I said, solve for some of the difficulties in terms of dosing and stability and other things that go with this. There’s also some question currently around the current vaccines and really the sustainability of the effect of immunogenicity. I was reading articles today in the U.S. around some data that they’re looking at, but and initiating additional booster shots for a third dose for those that have received the vaccine. So we will see how it goes. This -- vaccine development takes time. This is -- we -- this has been an accelerated process with a lot of effort by a lot of people and that’s great. But there’s still some issues to work through.

Chris Cooper: Okay. Thanks.

Paul Perreault: Good science you know.

Mark Dehring: Thank you, Chris. Our next question comes from Andrew Goodsall at MST Marquee. Go ahead, Andrew.

Andrew Goodsall: Thank you very much for taking my question. I was just going to ask you Paul if you wouldn’t mind just breaking out, giving us prices, volume within the three did Ig, correct?

Paul Perreault: Yeah. So thanks, Andrew. I think as we take a look at the space there was certainly a shift mix with HIZENTRA and PRIVIGEN, right? So you saw that as we took a look at the Ig franchise, we had in HIZENTRA volume from fiscal 2020 to fiscal year 2021 move from about 21% or 25% of volume in subcu to 28% of our volume in subcu. So when you look that volume versus price versus revenue, I would say, that you probably have somewhere in North America, Asia-Pacific and Intercontinental all up globally somewhere around 6% price, but that includes market mix shift in that pricing with revenue accounting for about 3% on a global basis. North America, the U.S., again it was really driven more by HIZENTRA than anything else and across Europe it was kind of split between both PRIVIGEN and HIZENTRA.

Andrew Goodsall: And just thinking about Albumin, you had a stunning developing number just thinking about the outlook there with the China -- just with or with collection your expectations Albumin will continue to be quite strong just driven by that joint effect?

Paul Perreault: No. I think it will be. And of course, the China growth is driven by a lower result last year with the increase -- the huge increase this year because of the shift in operating model. So it’s normalized. But we still see the demand for Albumin in China growing kind of the mid -- upper mid-single digits at this point. So we don’t think it’s so down anytime soon. That’s off at a huge base as you know. So we still think there’s quite a market and demand for Albumin in China.

Andrew Goodsall: Is that mix relying on more imported just to make that, just in terms of the domestic production?

Paul Perreault: Yeah. Look, there -- in China the domestic production is still -- has the same problems that we have here, which is the hardest thing we do is collect plasma and it’s the same there. So it’s really an import that’s driving it at this particular point. So I don’t see that slowing down anytime soon. They can’t supply all needs and not at that growth rate not any time soon.

Mark Dehring: Andrew, next question comes…

Andrew Goodsall: Okay.

Mark Dehring: … from Saul Hadassin at Beringer Capital. Go ahead, Saul.

Saul Hadassin: Thanks, Mark. Good morning, Paul and Joy. Can you hear me?

Paul Perreault: Yes. Great, Saul.

Saul Hadassin: Thank you, Paul. Can I just ask, Paul, just following up on that question on Albumin and the outlook for growth in China? I was wondering if you can comment on growth ex-China particularly for U.S. and Europe. And I guess thinking about medium- to long-term outlook for Ig demand, presumably remaining at that sort of high single-digit level. Is there any concern internally about Albumin sustainability in terms of that demand profile and balancing last liter?

Paul Perreault: Not that we can see in the near future. Saul, I mean, our outlook is very bullish on balanced liters over the next number of years. So and that’s driven by both Europe and by China, and emerging markets and Intercontinental. So we’re still saying things. U.S. is really not driving the growth in Albumin, I would say. And so we actually saw some weakness in the Albumin market, but a lot of that was also due to just the hospitals being filled up in COVID in the U.S. and people bringing Albumin into the U.S. along with Ig. I think most of the general checks that people have relayed to me Ig for instance in the U.S. which is where everybody likes to take a dartboard at is really that there haven’t been major shortages in the U.S. But we have seen in other countries some issues with Ig and some of the folks are also bringing their Albumin there. But the lower plasma collections are impacting everyone and that includes Albumin production, as well as Ig production.

Saul Hadassin: Thanks, Paul. And maybe just a quick one for Joy, Joy just looking at the operating cost profile of the business of CSL over the last three years to four years. There has been a significant increase in both sales and marketing and general admin costs, in terms of the sort of more medium-term outlook, do you expect any potential for better operating leverage through either of those two cost lines?

Joy Linton: Thanks, Saul, for your questions. So if I take sales and marketing first, I think, we would see, as a percent of revenue about where we’ve been, which are sort of high-single digits. We will continue to invest in new product launches and we do have quite a strong R&D pipeline coming to market in the next few years. So that’s probably what will drive any increase in that cost. In terms of G&A, we actually expected to be slightly lower than where we’ve been. You saw that through the pandemic, we’ve made quite a number of structural changes and we think we will be able to hold the growth of G&A to a lower level than where you saw it pre-pandemic.

Saul Hadassin: Right. Thank you, guys. That’s all I have.

Mark Dehring: Thanks Saul. Next question comes from David Low at JPMorgan. Go ahead, David.

David Low: Thanks very much. A questioned Joy as well. Joy you commented on margins a few times in the presentation and talked about there being remaining under pressure, just wondering if we should be thinking about that from the second half of the year or whether that’s an FY2021 comment, because it, frankly, the guidance does imply in FY2022 that you will be 4 times as much profit relative to the second half of the year. I am just trying to understand how we square the very soft second half number with a guidance for FY2022, please?

Joy Linton: Thank you, David, for the question. A first thing, I would say is, we don’t really manage our business half on half. So that’s probably the first thing I would say. We are still expecting margin expansion in Seqirus. So you need to distinguish Behring from Seqirus in that sense. But if I talk Behring for a moment, the increased plasma costs have really come in the back part of FY2021 and that’s all still sitting in inventory. So that’s what’s going to contribute to some additional margin compression into FY2022. If that help?

David Low: So gross margins presumably continue to weaken relative to welcome in, frankly, so we just ignore the half years because that don’t have any meaning?

Joy Linton: Your first comment I think is a valid one, which is that there will be continued margin compression into FY2022 off the back of what we’ve seen in terms of plasma collections in FY2021.

David Low: Okay. Thank you. I guess, my second question disparaging topics. The last thing the Seqirus division in the second half was quite a lot larger than we’ve seen in the past $210 million. So, let’s get to talk a little bit to what the drivers there are? I mean from my thought process would be that the Southern Hemisphere sales were presumably quite low, I was wondering whether there was a return -- higher returns costs in this year than we’ve seen in previous years or are there other variables we should think about looking forward?

Joy Linton: I can take that.

Paul Perreault: So…

Joy Linton: So, you go Paul.

Paul Perreault: You want to take that, Joy.

Joy Linton: Yeah.

Paul Perreault: So I was just going say that, part of this is that, we’re doing unprecedented work in the second half as we switched AstraZeneca and the Seqirus businesses incurring all those costs. So rolling out already close to 16 million doses and retooling our facilities and moving people has cost us quite a bit of money on that side of the business as well. So that’s a big part of where some of that cost is coming from because we’ve had to incur these costs.

David Low: So that would greater than as we back to sort of more cost with the HAEGARDA?

Paul Perreault: Not until we -- it will -- it’s still going on into this first half…

David Low: Yeah.

Paul Perreault: … for sure because we haven’t finished making all the doses.

Joy Linton: And my only build would be the seasonality of the Seqirus business has probably strengthened, given the strong Northern Hemisphere sales we’ve had and expect to continue to have. And so that’s actually driving more seasonality not less.

David Low: But more waiting for the first half?

Joy Linton: Correct.

David Low: Yeah. Thanks very much.

Mark Dehring: Thanks, David. Next question comes from David Bailey at Macquarie. Go ahead, David.

David Bailey: Yeah. Thanks Mark. Good morning, everyone. I am following up on David’s question actually, 54% gross margins for Behring in second half. Should we think about that thing a reasonable base of fiscal 2022 or are you alluding to an expectation for the decline from that level of fiscal 2022 for Behring?

Joy Linton: Yeah. That’s not an unreasonable assumption, David.

David Bailey: Okay. Another one is around Ig inventory. I think previously you’ve talked to having a couple of months’ worth of inventory on the Ig side. I am wondering where this currently sits, if there’s any drawdown in the third or second half of fiscal 2021 or if it’s an expectation that you might look to pull that down in fiscal 2022?

Joy Linton: Yeah.

Paul Perreault: We will be continuing to draw on some inventory…

Joy Linton: Yeah.

Paul Perreault: … for sure.

Joy Linton: Agreed. Yeah.

Paul Perreault: So you can see that in the inventory, finished goods inventory line already, as we continue to move through 2021 and into 2022. So we’re going to run as hard as, but certainly, we are not going to expire everything that we have.

Joy Linton: Yeah.

David Bailey: That was -- just to be clear, was there any drawdown in the second half of fiscal 2021?

Paul Perreault: Sure.

Joy Linton: Yeah. Yes. And you wouldn’t -- we wouldn’t expect it to head back up until well and truly into 2023.

David Bailey: Okay. Thank you.

Mark Dehring: Thanks, David. Next question comes from Gretel Janu at Credit Suisse. Go ahead, Gretel.

Gretel Janu: Thanks, Mark. Good morning, everyone. Just to press on the gross margin a little bit more. So your inventory slide there was a big step up in raw materials in 2021, which I am assuming is due to the higher donors that were associated with plasma collection. I guess how much longer will it take these higher collection costs to flow through the P&L? I am starting got a bit concerned about FY2023 earnings and should we expect that lower gross margin to continue into FY2023?

Joy Linton: You want me to take that Paul? We’ve lost...

Paul Perreault: You want to take it Joy or you want me to take it?

Joy Linton: Yeah. I will -- yeah. I will take that. So, thanks, Gretel. Well nine months to 12 months right is the manufacturing cycle. And so what you’re seeing in inventory at the end of June 2021 will come through in FY2022.

Gretel Janu: Yes. But as donor fees remain high, it does imply that then gross margin should remain under pressure in FY2023 as well. Is that right?

Joy Linton: We -- well you’ve also got further pricing opportunities as you go forward. So we would expect that as volume comes back up we’re going to get further manufacturing efficiencies as Paul has already said and so that will improve margin over time. It will take a little while I think for margins to go back to where they were pre-COVID. But, certainly, by the time we get into FY2023 there will -- the trajectory will be certainly in the right direction.

Gretel Janu: Understood. Thank you. And then just...

Paul Perreault: I would -- sorry, Gretel, I would just -- I would agree with Joy and just say that as we -- as you see that collection line start to go up, you’re going to have offsets to the donor fees themselves with the overhead recoveries and it’s not just as you know in the plasma centers -- on the plants. So, more production through the plants through this year that really supply 2023, as you get into mid-2022, all that production is really coming out in 2023. So we don’t account for it actually release. So the numbers should look better the further out we go. So I wouldn’t worry too greatly about that.

Joy Linton: Agreed.

Gretel Janu: Yeah. Thank you. And then just. secondly, just in terms of collections, it’s now been almost two months since that announcement around the U.S.-Mexican border. I guess, where are we at in terms of trying to return resolution the US BBP and when -- what timing do you think that can be resolved?

Paul Perreault: Well, our hope is, as soon as possible. But this is a huge place with a lot of stuff going on with the new infrastructure proposals, Afghanistan, a number of other things. I wouldn’t say that the centers for collection of the board are the highest priority. But having said that, we’ve got a full court press on it and we’ve got a plan to try to get it resolved as quickly as possible. We have and I have personally had conversations at high levels within the government, as well as the states and with CDP and CBP and others. But certainly Department of Homeland Security, FDA and even today in the Wall Street Journal, there were some comments around the retail businesses. They didn’t mention plasma collections, but the retail businesses on the Board, they’re being adversely affected by policies that CBP has put into place. So I think there’s a growing concern, certainly, in those local areas and this is a complex country in many, many ways. But I can’t give you an exact time line Gretel. All I can tell you is that, it’s a full court press. Now having said that, we’re seeing collections improve without even having those collections in place, so once we get it resolved, we would expect that that also brings that additional collection back online.

Gretel Janu: Thanks very much.

Mark Dehring: Good. Thanks, Gretel. Next question comes from Dave Stanton at Jefferies. Go ahead, Dave,

Dave Stanton: Good morning and good evening, team. Thanks very much for taking my questions. Maybe change topics a little bit. CSL112, given you’ve restarted the trial, when do you expect to finish CSL112 clinical trial recruitment? And after that when might we expect topline results for it?

Paul Perreault: So I think the topline results are looking for October 2022-ish is the current plan. Recruitment has started again, obviously, as we mentioned. So we are trying to accelerate as much as possible. But there have been additional headwinds on a trial this size with COVID particularly, because people are moving physicians to different parts of the hospital and with the resurgence of the Delta variant in different areas across the globe, because this is a global trial. There are still some logistics for the trial that are putting some on the recruitment now. Starting, I’d say, in the spring of this past year, the Northern Hemisphere spring, things were really starting to improve well and now we’re hitting a few more headwinds, but we don’t know how long that will last. It really depends on vaccination rates and hospital load from that perspective. But we still should have enough events by the time the timeline comes to the Northern Hemisphere fall next year to look at the next analysis.

Dave Stanton: Understood. And as a follow-up to that, I mean, I guess, the futility analysis must have been positive for you to continue the trial?

Paul Perreault: Yeah. So we don’t get a lot of data other than when the -- because it’s all blinded that the Board that was looking futility analysis suggested that we keep moving. So that’s positive from our perspective.

Dave Stanton: Understood. And my second question relates to Northern Hemisphere flu vaccines. I mean, what’s your expectation for volumes or volume increase or decrease in Northern Hemisphere flu vaccine that you will supply the market in this flu season?

Paul Perreault: So the preorders have been growing up until this point went very well and we’re producing and there’s vaccine becoming available and being released. So our -- based on our pre-orders that we have, we expect to see another strong season. And it’s also, David, the mix shift to the more high value products, selling more and more of the high value products. So even if we were to kind of maintain volumes or have some slight increases in volume we expect the business to based on the profile of these products and the price points of the higher value innovative products that we have.

Dave Stanton: Understood. Just as a quick follow-up to that and some of your competitors have talked sort of about a 10% increase in volume, is that -- would that be a reasonable way to think about it for you for the Northern Hemisphere for this season?

Paul Perreault: Look I think from a preorder perspective, that’s fine, but we still don’t know where it will come in, because they pre-order from everybody, right? So that’s kind of the bogey that we have fight against. But so far things have been looking well.

Dave Stanton: Thank you.

Mark Dehring: Good. Thanks. Thanks, Dave. Next question comes from John Deakin-Bell at Citi. Go ahead, John.

John Deakin-Bell: Thanks, Mark. Paul, look, I just had a couple of longer term questions, if you don’t mind. Just first of all on flu, you’ve had the cell-based product now for a little while. We’re looking -- there’s a bunch of clinical trials on mRNA the life cycle of these technologies appears to be getting shorter and shorter. How do you see that market rolling out in the next few years? Do you think it’s likely that you will have three different technologies in the market at some point and how do you as a Board and management team, manage the funding of your strategy around that?

Paul Perreault: Thanks. It’s a great question. And I would say that, the acceleration has been active because of COVID. But flu is a different animal. And I guess, when I think about it, John, I think, about, you have to put four different antigens in this particular product at the moment. There is no universal vaccine. So now you are trying to deliver four antigens with the mRNA technology, which is going to take some time and its going to be a -- this clinical trials won’t be easy, because flu is always require thousands of thousands of -- tenths of thousands patients, even for even for immunogenicity. So tracking that is going to be interesting. And the other thing is really now the stability of the products in the cold chain with mRNAs as you know it’s been very difficult across the globe, that’s where a lot of product has been wasted is, because of supply chain within the [Technical Difficulty] that it has to do, so until they saw minus 70 and those types of things. Trying to get it out to all retail outlets in the Northern Hemisphere and keep it stable is going to be an issue, which is going to take some time to work through. So, it all sounds easy when you see the speed at which the mRNAs are developed, but billions of dollars have been pushed into that. So when I look at some of the competition and what their plans are, there are still a lot of technologies with influenza that are -- have been invested in by many of these folks. So they’re going to have to take a look at their current investments whether it’s ag or cell, and then see exactly how they can compete. So what I look at is our total portfolio. I see mRNA is a great shot on goal, because we have what I believe is the second generation technology with the self-amplification and so we’re going to invest in it. We invest in things that we think are high value that we have expertise in and that we can add value too. And so we balanced the portfolio and there may be some other lower value items in the R&D portfolio that we slowdown or put on hold and those are the decisions that we make every single day. So it’s really a matter of looking at the portfolio and making decisions where a lot of companies in our space, so I am talking about pharma and biotech get into troubles, they fall in love with things and they don’t make the hard decisions. But since we have the technology, we have expertise, we’re going to invest in the future and this is a future investment for the Seqirus business and for CSL.

John Deakin-Bell: Thanks, Paul. And just a second question, talking about companies falling in love with things, things like big pharma, excuse me, big pharma has fallen in love with rare diseases over the last few years and there’s been a lot of M&A in the space with Alexion on momentum to translate Biodel recently. They’re boosting their R&D pipelines through acquisition, whereas you organically done it. I mean, at some point should we expect that that to happen given the timeframes for CSL112, for example, was so long or should we just be expecting you to continue building internally and not really be focused on M&A as part of that strategy?

Paul Perreault: Look, I think, M&A has always been a part of the strategy. We’re just not serial acquirers. So when we take a look at M&A and we do deals, I mean, Seqirus was a deal that we did that people questioned. But again it’s about what you can add value to and where do you have expertise. Just to buy something to get bigger or because you have a lack in the portfolio, to me means you didn’t have a decent strategy to begin with. So it’s really about looking at your strategic intent and your focus areas of business and whether you think you have shots on goal and the ability to develop. All of these products take a long time to develop. I know with COVID, it seems like you can do it quickly. But a lot of things got put on hold to make those things work. So, I think we have to think about it carefully. We’ve always been prudent in our approach, which is if there’s something that we can add value to that’s in our area of core competencies, core capabilities or our core knowledge then it’s something I am interested in. But just to buy a portfolio that I don’t know anything about doesn’t really increase my chance of success that much, because you will lose people on those acquisitions, some of the expertise will leave and then you’re trying to refill the pipeline. So, I would just say that, it’s always there and I am always interested. We look at hundreds of things every year and we’ve done some things, as you know with Karsten [ph], Calamia and with Seqirus and other things along the way and even the licensing of EtranaDez with uniQure. We have the leading product in haemophilia B today and this will only enhance our position and our knowledge. And I’ve always said I was interested in gene therapy when there was something that made sense. So as we take a look at these areas, I think we’re in a good spot. But I wouldn’t say we would never do another deal by any stretch. You have to be reasonable about these things too. I just -- when you said frenzy, I attempt not to get into the frenzy and try to maintain some calm about the investments because all of you shareholders are interested that we do the right things for the business.

John Deakin-Bell: Very clear. Thanks, Paul.

Mark Dehring: Thanks, John. Ladies and gents, we’ve got time for one more question. And then unfortunately we have to draw to a close. I see there are a couple of further questions online. I will follow-up with you afterwards. But one more question from Sean Laaman at Morgan Stanley. Go ahead, Sean.

Sean Laaman: Thank you, Mark, and good morning, Paul and Joy. Paul, just first thing to say you have provided guidance a year ago with what’s unfolded since that point in time and then to deliver a number above that expectation is pretty extraordinary. So well done.

Paul Perreault: Thanks.

Sean Laaman: Paul, just to -- yes, just to kind of tease out a little bit on guidance. So it seems your comments to an earlier question indicated that the immunoglobulin number was more driven by price than volume and then thinking about your comment around collections being down 20% across fiscal 2020. And I guess sort of three quarters of that would feed your -- feed the fiscal 2022 number. I was just wondering why we might not expect immunoglobulin volume growth to be even more negative in fiscal 2022, and therefore, what’s the thinking around price? And then in terms of your 2% to 5% topline guidance, I know that you don’t break it down by division, but it also seems a lot of the heavy lifting of that 2% to 5% would fall to Seqirus. Is there anything wrong with that logic?

Paul Perreault: Look I don’t think they’re wrong with the logic, Sean. I mean, obviously, as we talked about earlier, inventory accounts for some things we can draw down. We can’t draw down forever. But that’s -- it’s also mix shift, geographic mix shift, moving out of tenders and into more sustainable markets where pricing is a little bit better. But also that movement, we expect further movement of HIZENTRA from PRIVIGEN this year in terms of the volume mix shift as well. So, geographic mix shift, volume mix shift to HIZENTRA at a higher price and some price appreciation in some markets as well. But it’s not a flawed, I mean, look for us to maintain the same level of Ig volume this year, it’s going to take a lot of effort. Through all the manufacturing facilities, through management of inventory, management of customer inventory, patient inventory to make sure that we can try to maintain where we are. I think we’ve got a very interesting year in fiscal year 2022, but the business has pulled out all the stops to deliver and I think it’s really good. But I think it’s kind of a see through into next year. I won’t give guidance today, but the indications when you look at plasma collection and where it’s heading and where we’re going. So, yes, Seqirus is going to be a contributor for sure. But also think about the rest of the portfolio, right? So IDELVION, not dependent on plasma collection, right? And we’re still launching in some countries. Our Specialty Products, we have enough plasma to meet the demand of Specialty Products. And although, people lament a bit what they see as a decline in Specialty. If you look at the key drivers of the value of specialties with HAEGARDA and KCENTRA, those products continue to perform. And so there’s things coming from that as well that really make a difference and we’re going to return to the volume increase with ZEMAIRA, which was really hurt this year with the -- some of the issues that we experienced in the manufacturing Sweden, Kankakee. So returning with RESPREEZA and ZEMAIRA, KCENTRA and HAEGARDA, as well as things like IDELVION and you saw the growth even in HUMATE with 13% this year, still a gold standard in the treatment of von Willebrand disease. So there are other things that are growing and continue to feed the portfolio on the Behring side. But clearly, we are also very happy with the performance of Seqirus and expect that that high value portfolio will continue to drive value for us.

Sean Laaman: Sure. Thanks, Paul. But just to be clear it is right to maybe expect the volume decline in 2022 for Ig tempered somewhat by price?

Paul Perreault: I think that’s not an unreasonable assumption.

Sean Laaman: Okay. And thanks, Paul. And then just a quick one for Joy, is there any sense of what the FX impact? I know you’ve provided constant currency net profit guidance, but just using the rates as they stand today? Is there any material movement on that guidance for FX?

Joy Linton: Thanks, Sean. Fairly early days, I would say, for FY2022. To date, I think, we would see it’s a fairly modest, but a little bit of a headwind in U.S. to Swiss franc. But, yeah, early days and I think we can provide -- we will make sure we provide a bit more update in October at the AGM on that.

Sean Laaman: Okay. Thank you both for your time.

Mark Dehring: Thank you, Sean.

Paul Perreault: Thank you.

Mark Dehring: And ladies and gentlemen, thank you for your attention today and your interest in CSL. We will now need to draw the meeting to a close. So, good morning and good-bye.